Insider selling can decimate a micro-cap stock. It can put the healthiest stock on its back and turn the most loyal investor against the perceived offender. It can turn love to hate, joy to anger, laughter to tears, and worst of all it can turn buyers into sellers and believers into short-sellers.
There is a time and a season for everything … For those forlorn souls who have positioned in Universal Guardian, NASDAQ OTC: UGHO, which I strongly encouraged only one blog ago, I pray thee stay in for the long-term, for the worst is over. In my opinion, this wrecked ship of a stock has sunk as low as can it go. The CEO has sold approximately 166,000 shares over the last two months, but he is not the real culprit here, if there is a culprit. Michael Skellern founded the Company five years ago, invested hundreds of thousands of dollars of his own money, and in the early years went months at a time without a salary as he built UGHO one bullet at a time. I asked him why he sold. His answer was not of the complex sort: “I needed the money,” he said. He has on the other hand, chalked up ten consecutive quarters of revenue growth, reduced his SG&A, launched several new defense products and appears to be marching towards another record revenue quarter.
Nonetheless, the CEO had the unfortunate need to sell during the same period another large shareholder had the need to sell. This seller, who several years ago raised $10 million for the Company, has sold millions of shares over the last six months and hundreds of thousands of shares over the last two months. The result has created the ugly UGHO descent. The word I have is that this funder, who held in excess of six million shares, is very close to his final exit. We have promised to send him a bottle of his favorite whiskey the minute he drops his final UGHO sell ticket. Though a good man, we have grown weary of his selling. This funder has been long in the stock for a number of years and his organization is well known for its integrity and long history of success in helping small-cap companies. But his need for money has left him no room for mercy.
Now investors are left with the possibility of turning his need into their fortune. If a company is fundamentally healthy, the maxim, “Buy on weakness,” is sound advice. In this case, wisdom is yelling from the rooftop, “Buy Low and Sell High.”
As I said in my last blog, in the Age of Violence one needs his fair share of Brawn, Brains, and Bullets. As a global risk mitigation company and a homeland defense company, UGHO will live to fight another day. And that day has come. Now is the time for UGHO investors to return to their lost love and for new investors to consider a new love. Yes, I am paid to pontificate upon the virtues of this stock. And there is plenty of virtue here hidden beneath the bad timing and insider selling.
