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ExOne (XONE) - Who Is Tu Guihua And Mega Fame Holdings?

|Includes:ExOne (XONE)

Before discussing the simple question of the title above, we want to congratulate Gotham City Research on its outstanding work uncovering the Let's Gowex fraud. Kudos to Gotham City Research for its outstanding work!

Moving on to ExOne (NASDAQ:XONE), shares have had a parabolic move since early May, climbing nearly 90% from its lows on minimal news. However, two recent filings with the SEC led us to ask the simple question - Who is Tu Guihua, Mega Fame Holdings, and Novel Century Ventures? This morning, a Form, 3 was submitted with the SEC disclosing an initial statement of beneficial ownership of 2,235,596 shares in XONE by a consortium "group" comprised of two British Virgin Island funds called Novel Century Ventures and Mega Fame Holdings, as well as an individual named Tu Guihua, that uses a Chinese address in the Guizhou Province.[1] The shares reported by the "group" would represent 15.5% of the outstanding shares based on disclosures in ExOne's most recent 10Q.[2] Surely, the magnitude of the purchases, representing a large percentage of volume during the recent parabolic move, could explain the mysterious move in XONE. Based on the Form 3 disclosures, it appears the "group" exceeded 5% requirement on 7/1/14 for 13D disclosure pursuant to Section 12 of the Securities Act of 1934. However, under the short swing profit rule of the very same act, the "group" would be subject to short swing profit restrictions given its ownership exceeds 10% of outstanding shares. The goal of the six month statutory window is to "eradicate speculative abuses."[3] (Investors may recall the Wood River Endwave securities fraud/prison sentence when discussing the importance of beneficial ownership filings[4]).

Incredibly, just three minutes after the Form 3 was filed disclosing ownership of more than 15% (subjecting the "group" to short swing profit statutes), a Form 4 was filed with the SEC disclosing the very same "group" had begun to sell its XONE on 7/2/14, just one day after triggering its 13D disclosure requirements.[5] Why had a group that was so aggressive running the stock up, decided to start selling shares one day after it triggered disclosure requirements?

We have been unable to find any information on the "group" shareholders, Novel Century Ventures and Mega Fame Holdings, or its principal Tu Guihua (aside from a similar filing on MakeMyTrip (NASDAQ:MMYT)).

To be clear, we are in no way suggesting, or even implying, that ExOne management even knows who this "group" is, and we have no reason to think ExOne management has done anything wrong. However, the circumstances of a 90% stock price move, combined with a mysterious filer that subsequently begins selling shares one day after an initial disclosure - triggering the short swing profit rule stature in the process, sure creates additional intrigue for a company that has missed and/or guided down every quarter of its public existence.


[1] http://www.sec.gov/Archives/edgar/data/1561627/000120919114046155/0001209191-14-046155-index.htm

[2] www.sec.gov/Archives/edgar/data/1561627/...

[3] Bershad v. McDonough, 428 F.2d 693

[4] www.siliconbeat.com/2008/01/10/endwave-w.../

[5] www.sec.gov/Archives/edgar/data/1561627/...

Disclosure: The author is short XONE.

Stocks: XONE