Unique Fabricating (NYSE: UFOB) stock is down 16% this morning. UFOB stock has given up half the gains from Friday that is. On the grounds that what was happening was just a rumour frenzy. Well, OK, it's easy to say that now - it's just that we said it last Friday too, while it was still going on. Some stock price movements are easy enough to call.
As we did with Unique Fabricating:”The thing is, this also happened again in May, after that April little spurt. Again us on UFAB stock: “Unique Fabricating (NYSE: UFAB) stock is up 91% this morning premarket. It has to be said that there's no apparent reason for this even as trade in the UFAB stock is several hundred - yes, several hundred - times normal. Perhaps the most obvious and pertinent observation is that this all happened about three weeks back as well. Unique jumped for not even a full day then settled back down again. Which means - not certainly, not at all, but this is perhaps the way to bet - that the same will happen this time.” To avoid narrative uncertainty, yes it did.”
In fact, this is the third little speculative leap in UFOB just this year. It's therefore easy enough to call out the next one as being more of the same.
Unique Fabricating stock price from Google Finance
It's worth being a little more specific here. Yes, there's a business at Unique. It makes stuff, it has turnover, employs people and so on. Even has a pretty good customer list. So there's something there. And it's unlikely that anyone would put it into liquidation - Chapter 7. It's a significant part of the auto production chain after all.
However while there's a business there that doesn't mean there's any value to the equity. The debt burden is almost certainly greater than any asset valuation. There might well be a reorganisation. But if that happens it'll likely be in Chapter 11. And we think it vanishingly remote that there will be any equity value - value flowing to current equity that is - after such a reorganisation.
So, Unique Fab, we have that on the list of fun bets, speculations even, but don't for a moment get confused and start thinking that it might be an investment
