LD Holdings (OTC: LDHL) found itself under a bigger microscope as a big promoter of the company faced charges of running a $23 million investment Ponzi scheme. According to the Toledo Blade, Brad Huebner, owner of the BH Group, who has touted LD Holdings over the last 60 days, was arrested on multiple counts of wire fraud and money laundering. The news comes on the heels of a negative story about LD Holdings published by Seeking Alpha on September 22, 2012, that raised questions about CEO John Ayling. Additionally, the article raised the specter of possible SEC action that could result in a regulatory trading halt.
At first, the reaction by traders to the latest story stayed rather muted. The stock opened at $1.16, unchanged from yesterday’s closing bell. In the first few minutes after the opening, the stock managed to edge higher to an intraday peak of $1.19. Then, like a rock rolling down a mountain, share prices gathered momentum to the downside. By the time traders had swallowed the last morsel of lunch, the stock had traded on the low for the day at $0.77. The heaviest volume on the day also came during this time period. When the closing bell rang, the stock registered a loss of over 28% to end the session down 33 cents at $0.83. Volume for the day registered 590,000 compared to average day when 177,000 shares trade hands.
The stock began to trade actively in the last week of April when shares traded as low as $0.02. The company reported quarterly financials during the second week of May, which showed a decline in revenues from $107,000 for the quarter ending March 31, 2011, to $43,000 for the same period in 2012. According to the company, the decline was due to the closing of a large restaurant in Michigan and the opening of a smaller one in Ohio. The news sent buyers scurrying for stock as share prices touched $1.00 with most of the appreciation coming in one day. After spending the summer drifting around a price of $0.25 per share, the stock took off once again at the beginning of September. In a matter of days the stock gained 500% and reached a new high of $1.57. The run was also related to quarterly financials released in late August that highlighted a slight improvement in revenues from the previous quarter, but a larger loss in operating income.
Since the Seeking Alpha story on September 21, 2012, buyers of LD Holdings shares have started to wilt. Over the last six trading days, the stock has fallen by nearly 50%. Traders will be looking for more details to the story in the days to come.
LD Holdings is a financial management company operating out of Perrysburg, Ohio. The company has two divisions that manage the portfolio of companies in which LD Holdings has a percentage of ownership. LD Holdings was founded in 2000.
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