Migao…SOLD!!

This one sucks. I learned my lesson here.

My original idea with Migao was to buy a company that will participate in the growing middle class in China. A company like Migao was growing and was easy for the financial community to market to investors. Lets be clear, MGO (if it’s a legitimate company) is only an OK company if it’s in the right situation. As long as they have pricing power to their end-users they can stomach wide swings in their input costs (mainly potash).

However, I failed to realize how risky this company was. The real mistake was when I brushed off the RTO risk after a few companies in China were discovered as frauds. I didn’t think that MGO was a fraud given it’s high insider ownership and board. But that really doesn’t matter.

I sold MGO this last week after they were forced from the OSC to reveal the document that related to PEC (Potash Export Company). They were vague the entire time with who exactly PEC was and how they could supply so much potash without being on the radar of the investment community. I was actually OK with it. I figured that if MGO was to get a decent discount to the spot price, it would put the major suppliers in a tough spot. Once they were forced to issue the document, they still issued the bare minimum. I would have thought they would take the opportunity to explain to investors who PEC was. I was actually expecting a conference call or at least a detailed press release. Instead…nothing but the minimum.

Maybe this is a real company, but I just don’t feel right. That’s why I sold.

I am taking my losses and running for something I can really wrap my head around. This has been a very expensive lesson that I hope not to repeat again.

Dean

5 Comments

Filed under Company Updates

5 responses to “Migao…SOLD!!

  1. Pingback: Migao…SOLD!! - Petty Cash - B-Hive - WAGGLE

  2. penny

    You have erred greatly and psychology has clouded your judgement. This is a pitch still in the air, the outcome still is far from certain. Distress situations often take many quarters or even years to work out.

    • You may be right. There is the chance that MGO isn’t a fraud. Quite frankly I don’t know what that chance is. My latest bet on MGO was that it wasn’t a fraud and that the disclosure of PEC would be the catalyst. After they announced the release on SEDAR the stock hardly moved until last week. I don’t why the delay, but it wasn’t anything that MGO released to the public. They also haven’t bought any stock back since October and I wasn’t happy about the options pricing in September. I really struggle as to why MGO did’t do an official news release after the were pushed by the OSC to do the SEDAR filing. They could have disclosed so much more and potentially vaulted the share price higher. Now I don’t know what it will take to give MGO the official “NOT A FRAUD” stamp, but I don’t think I have the patience to see.

      Thanks for the comment.

      Dean

  3. Andy Michlas

    If you looked at the document they posted in detail, you would have seen that its full of mistakes and disclosures that don’t. The contract was fake at best. PEC female president doesn’t exist, double company stamps, spelling mistakes, Appendix of different date than contract, PEC mandatory customs border information not disclosed, the address of PEC doesn’t match, nobody heard of them. Ask any person that has ever dealt with commodity contracts of such nature and they will scream fake 100%.

  4. Migao now has Roullier (France) now as major investor. The company has massive prospects.You would be wise to read the latest news releases. Migao is a very cheap buy at the moment.

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