Firm’s Selloff of Avalon Stock Valued at Nearly $13M
WARREN, Ohio – It didn’t take long after a brokerage house in the Bahamas disclosed it had bought up 1.9 million shares of Avalon Holdings Corp. to start dumping it all for a cool $13 million.
According to documents filed with the U.S. Securities and Exchange Commission, Nassau-based MintBroker International Ltd. on July 27 sold the first chunk of its stake in Avalon – 192,340 shares – at a whopping $15.50 per unit, the same day it was revealed that it had accumulated 1,922,095 shares of Class A common stock in the company.
Throughout the year, Avalon share prices have hovered between just $1.80 and $2.25 – but last week their value took a curious swing upwards.
On Monday, July 23, Avalon’s stock closed at $2.20 and then gradually increased over the next three days to $5.69 per share. On July 27, the day of the discloure, the stock soared to $10.25 – nearly double its price from the previous day, while aftermarket trading sent shares climbing even higher.
MintBroker’s selloff that day hauled in nearly $3 million – $2,981,270 to be exact. Were that stock sold four days earlier, it would have been valued at just $423,148, based on the stock’s closing value.
Premarket trading on Monday July 30 vaulted Avalon’s stock price to $36 per share, opening at $16.97 – trading as high as $20.20 per unit that day. At the same time, MintBroker unloaded a large portion of its stake – 719,885 shares at $8.15, or $5.8 million – according to a Form 4 the company filed with the SEC.
SEC filings show that the following day, MintBroker discharged another 799,720 shares at $4.15, and yesterday sold off another 202,642 shares at $3.91 – still well above the July 23 close of $2.20.
In all, the selloff amounts to $12.973 million. No documents were available to determine the exact price MintBroker paid for it shares.
Avalon shares traded at $3.47 at the close of the market Wednesday.
Avalon Holdings Chairman and CEO Ron Klingle said his company has nothing to do with MintBroker and its founder Guy Gentile, and he’s unsure as to what its intentions were when it gobbled so much of Avalon’s stock.
“We know very little about what he was trying to do,” Klingle said. “There’s a lot of speculation out there.”
MintBroker is a broker dealer that was founded in 2011 by Gentile, according to media reports. In 2012, Gentile began working as an informant for the FBI after he was accused of setting up “pump-and-dump” schemes that took investors for about $17 million. The case was dismissed in 2016.
Pump-and-dump is an illegal practice that attempts to boost the price of a stock through misleading and exaggerated information. Often, the perpetrators have established a strong shareholder position in the company and then dump the stock once shares hit an agreeably high price.
Two other companies – New Concept Energy Inc. and MER Telemanagement Solution Ltd. – saw its stock price soar earlier this month and then crash after MintBroker revealed its shareholder position in those businesses.
Gentile told Bloomberg.com on Tuesday that his intention was to organize a hostile takeover of Avalon, and not to hatch a pump-and-dump scheme. “We were going to try to do a hostile takeover of the company,” he told the news outlet.
Yet any attempt at a takeover would have been futile.
Klingle holds approximately 67% of voting power at Avalon, and he has no “present plans to divest any of his holdings,” according to a statement the company issued on Monday.
The company’s proxy statement lists Klingle as owning 611,133 shares of Class B common stock, or 99.8% of that class. He also owns 170,417 shares of Class A common stock, or 5.3% of that class. In all, he controls 67.4% of total voting power in the company.
“While the company is confident in its business plan, it has made no recent material changes to that plan and is unaware of any information or events that would warrant the stock activity over the last five days other than the purchases disclosed in the Form 3,” the company said.
Avalon Holdings provides waste management services to industrial, commercial, municipal and government customers, as well as landfill and wastewater injection services in northeastern and Midwestern markets. Avalon Holdings also owns Avalon Resorts and Clubs Inc., which includes the Avalon Inn hotel and three country clubs.
“Nothing is going to change here,” Klingle said.
Posted Aug. 1, 2018:
Avalon Shares Soar, Then Crash After Big Stock Buy
Copyright 2019 The Business Journal, Youngstown, Ohio.
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