Monday, 18 November 2013

In remission: USH patiently waits

Directors of failed listed investment companies sometimes promise to "consider" giving back the funds they have gained control over and are taking fees out of. Unsurprisingly, such promises are never kept, as some great new "opportunity" always emerges, prompting the directors to instead raise even more capital. If the company fails so spectacularly that new sucker investors cannot be found, there are several options, the easiest of which is to just walk away from the smoldering wreck and start a new fund. Another option is to rename and recapitalize the company with accomplices, using fake transactions between the related parties to inflate the valuation of remaining assets, as in the case of Australasian Wealth Investments (AWK.AX). Sometimes failed investment companies are hibernated as the directors wait for the right time to resume share issuing. One such carbon-frozen company is U.S. Masters Holdings Limited (USH.AX).

USH is a dormant listed securities fraud incorporated in the British Virgin Islands. According to its latest NTA disclosure USH has net assets of $255,000, or $0.011 per share, largely held as cash. The last traded price for USH was $0.20, or 18 times current asset backing, and this is the price USH advertises as the current ASX "market" price on its website. USH has not traded on the ASX since 2012 and is currently bidless. In its 2013 annual report USH reports $25,000 in revenue and $729,000 in expenses, with cash decreasing by $607,000. Auditor Ernst & Young nevertheless unreservedly endorsed the annual report, with no going concern qualification. Because why not? It's not like they will be held to account by anyone.

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