Despite Significant Dump, I Won't Be Buying This Stock
A newly-public name has seen a remarkable rise and fall, offering a lesson to investors.
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Sometimes, truth is stranger than fiction.
If I showed you the below chart 100 times without an explanation or you could see the ticker, I bet you would guess that this company declared bankruptcy or announced major fraud in their financials.
Turns out, the stock dropped 92% because it was a Monday. The market was open. It had run too far, too fast.
In other words, there is no clear explanation, but that’s not to say there isn’t something going on with JBDI Holding (JBDI). The company came public a few weeks ago, offering 2.25 million shares at $5.00, with 500,000 of those shares coming from existing shareholders.
In my experience, when 22% of your offering is insider selling, it’s a caution flag. Revenue declined slightly from 2022 to 2023, landing just above $11 million. Net income plummeted by more than 60% year-over-year to just over $800,000. This is despite the fact that the company comprises 9.1% of Singapore’s reconditioned and new drum containers industry.
The company did pay out a big dividend, an authorization of over $1 million to its major insiders, has $1.57 million due to related parties and $1 million of transactions to related parties that includes a six-figure consulting fee to a corporation owned by the majority shareholders.
So, when you see the stock price its IPO at $5, then run to nearly $40 with a $760 million market cap, it should make you question how this happens, especially with this many warts on it.
Despite the 92% dump, I won’t buy this stock. You and your education are the only thing that can protect you from this. Don’t rely on a three-letter agency. Take a few minutes to learn how to search Edgar and read company filings. What you can learn over time will be pay dividends.
At the time of publication, Byrne had no positions in any securities mentioned.
