United Development Funding III UDF and United Development Funding IV UDF filed on Forms 8-K with the SEC on Monday, detailing the misleading anonymous posts regarding the companies as unlawful by the hedge fund or funds that attacked them.
The companies responded to the claims in its SEC filing, stating that the posts appeared on Internet sites and contained misleading statements, speculation and rumors, demonstrating a lack of understanding of the residential development project life cycle.
United Development Funding shares were up 5.50 percent as of early morning trading on Tuesday.
"Investors who wish to understand our business should review our registration statements and periodic SEC filings, which describe the business model for each fund," the filing noted. The companies have been cooperating since April 2014 with the SEC's with a non-public fact-finding investigation.
Analyst Comments On Back Of Anonymous Report
Citron Research's Andrew Left spoke with Benzinga, stating that the company appears to be a Ponzi. This follows a tweet Left made, saying the stock "can go to 0."
Left's comments came on the back of the anonymous report posted on hedge fund network Harvest, called United Development Funding a "Texas-sized scheme." The unnamed author noted, "The UDF umbrella exhibits characteristics emblematic of a Ponzi scheme." These characteristics include new capital and multiple iterations of United Development Funding that could allow the company to pay earlier investors, the analyst added.
United Development Funding shares crashed more than 50 percent last Thursday and Friday following the circulated Ponzi scheme implication.
Hagens Berman Sobol Shapiro Launches Investigation
United Development Funding IV's SEC filings indicate United Development Funding's 2015 distributions to shareholders had been funded with borrowed money. United Development Funding IV's recent SEC filings indicated that only 71 percent of its year-to-date distributions in 2015 were derived from cash from operations. The company's remaining 29 percent of the distributions paid for were financed by credit facilities.
Image Credit: Public Domain© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.
