The decision by Truett-Hurst, Inc., (THST – NASDAQ Small Cap Market) to drop the offering price for its IPO should not be a surprise, given that investors were being asked to buy shares in a company with no physical assets, where public shareholders were locked out of any decisionmaking or influence, trumped by a small group of insiders who stand the most to gain from the offering and whose various interlocking conflicts of interest shed light on the clubby way that business is done in wine country.
Those travails are further compounded by the fact that the company is a conglomeration of smaller operations cobbled together in an LLC that is in violation of its loan terms, has acknowledged financial reporting problems, and has a myriad of brands, packaging, and other marketing bling all without expressing a coherent strategy in which to make them play well and profitably together.
Another whammy just might be last month’s straight-forward, buttoned-down debut from Crimson Wine Group (OTCQB: CWGL), which could have soaked up the available risk capital for investors looking for stock in an “emerging growth company.”
And, finally, two other investor-toxic situations plague THST’s SEC filings. First, it concentrates on various optimistic industry trends, boasts of packaging and other bling, but never actually focuses on its own successes in the marketplace. This reflects a lack of strategy — by its absence in the filings. Secondly, the form of the filings is fragmentary with the full picture of many topics scattered in multiple places, making it necessary to play hide and seek with information. Both of these are off-putting to investors trying to see if this is a horse they want to bet on.
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