The $100 million market valuation of Hometown International (HWIN), a publicly traded company whose sole asset is a small deli in rural New Jersey, has prompted a prominent hedge fund manager to sound the alarm about “quasi-anarchy” in the market.
In a letter to investors, David Einhorn, founder of Greenlight Capital, singled out the wild behavior of penny stock Hometown International, which began trading in 2019: “The deli had $21,772 in sales in 2019 and only $13,976 in 2020, as it was closed due to COVID from March to September. HWIN reached a market cap of $113 million on February 8. The largest shareholder is also the CEO/CFO/Treasurer and a Director, who also happens to be the wrestling coach of the high school next door to the deli. The pastrami must be amazing. Small investors who get sucked into these situations are likely to be harmed eventually, yet the regulators – who are supposed to be protecting investors – appear to be neither present nor curious. From a traditional perspective, the market is fractured and possibly in the process of breaking completely.”
Silver Law Group is a national securities and investment fraud law firm that represents victims of investor fraud and market manipulation schemes. Our attorneys represent investors in class actions against issuers in state or federal court, in FINRA arbitration claims against Wall Street firms for stockbroker misconduct, and SEC whistleblowers. If you own/ed stock in Hometown International and have questions regarding the company or your legal rights, contact Silver Law Group for a no-cost consultation at (800) 975-4345.
For a publicly traded company with a nine-figure market cap, Hometown International retains humble origins—a small delicatessen in rural New Jersey, located next to Paulsboro High School. When the company filed its Form S-1 registration statement to the SEC, it described itself as the “originator of a new “Delicatessen” concept called “Your Hometown Deli.” With one store located in Gloucester County, New Jersey, the business was incorporated in Nevada in 2014.
Far from expanding since then, over the last two fiscal years, revenues from its one deli amounted to around $35,000. And yet CNBC noted that in 2020, during the six months the deli was closed due to the pandemic, Hometown’s stock price rose from $3.25 per share to $9.25 per share. The same year, during which the business incurred $600,000 in expenses, Hometown posted a net cash gain of $.2.2 million, partly from selling stock. Paul Morina, the CEO and high school wrestling coach, is the company’s largest shareholder, with 1.5 million shares of Hometown stock and warrants for 30 million more shares, CNBC reported.
Another CNBC article detailed Hometown International’s ties to a disbarred New Jersey lawyer, Gregg Jaclin, who is now serving a federal prison sentence for conspiracy and obstruction of justice. In 2015 and 2016, when Hometown International filed prospectus documents with the SEC, the company was sharing those communications with Jaclin. Separately from the crimes for which he was sent to prison, the SEC reached a final judgement against Jaclin in 2019 for running a fraudulent shall factory scheme in which sham companies were taken public and sold for a profit. Jaclin was disbarred in New Jersey last year.
Scott Silver, Silver Law Group’s managing partner, is the chairman of the Securities and Financial Fraud Group of the American Association of Justice and represents investors nationwide. Please contact Scott Silver of the Silver Law Group for a consultation at email@example.com or toll free at (800) 975-4345.