This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Energroup Holder Still Confident

Glen Bradford is a contributing writer to TheStreet whose views on stocks are independent of TheStreet's news coverage.

NEW YORK ( TheStreet) -- In the past 48 hours, I've been getting tons of texts, emails and messages along the lines of, "What's up with ENHD ( Energroup Holdings)?"

Anyway, I and two others own more than 5% of the outstanding shares at this point, and I was asked by to follow up because I originally penned an article claiming that it was the cheapest company I knew of.

The company's shares have plunged in the last two trading days after it filed a notice with the Securities and Exchange Commission to cancel the registration of its stock.

In my opinion, the company is worth $800 million plus. You figure, $1.30 earnings per share in 2010 and a growth rate of over 30%. Meanwhile, the company had once traded at a valuation of $80 million and it has actually dropped to a valuation of around $10 million. Note that the company has $40 million of cash. The disconnect here basically is, "What do the common shareholders actually own when this is all said and done?"

If Energroup Holdings (OTC BB: ENHD.OB) is indeed a fraud, it is worth $0. But all the frauds I've seen print and sell shares and disappear. Energroup Holdings so far is playing by the book.

If you were the CEO/chairman of said company, imagine dealing with unfriendly American investors who ask you to jump through hoops and meanwhile are selling out of your company. Why not go somewhere else?

How about somewhere that actually gives you a reasonable valuation? My informal understanding is that the chairman is looking to list somewhere else -- Shanghai or Hong Kong -- and will probably get a much deserved earnings multiple of 30 times or more.

There has been a lot of debate over fraud surrounding the Chinese micro-caps. In fact, there is occasional fraud, but it's not even close to as bad as some of these prices will lead you to believe. A lot of the fraud claims are fraudulent themselves, in my opinion --- that is to say that the claims are designed and distributed to benefit a small subset of investors who actively short companies, spread deceit with such depth that it's hard to verify, cover their shorts when people panic-sell, and in some cases --- actively remove all traces of their deceit. It's pretty much criminal.
1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
AAPL $93.64 -0.11%
FB $118.57 0.84%
GOOG $698.21 0.75%
TSLA $241.80 0.43%
YHOO $36.53 -0.19%


Chart of I:DJI
DOW 17,891.16 +117.52 0.66%
S&P 500 2,081.43 +16.13 0.78%
NASDAQ 4,817.5940 +42.2360 0.88%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs