By D.K.

Certainly, there are stocks that, putting it simply, you need to be careful with. One such stock at the MSE is POPK (Popova Kula).

When I look at companies, I evaluate their management, majority shareholders if such exist, and of course their product(s).

With Popova Kula, there was a major rush to go public (not surprising).  For its final push to go public Popova Kula's Management asked for help from a private investment firm, popularly called Venture Capital Company.  Venture Capital Company i.e. Private Investors have one thing in common: they will give you the funds with expectations of getting their money back ten fold and in a very short period of time. 

Popova Kula could have gotten their investment in ten different ways, however they picked the worst way. All of this raised red flags and soon POPK was on my black list.

So what happened with Popova Kula?

It did go public. Because of the earlier investment, the US investors received rather large amount of POPK shares.  As soon as POPK hit the Stock Exchange, the private Investors flushed (sold) all of their shares. In 30 days, POPK stock went from 440 to 100 denars, in a period when every other company was moving upward!

There was nothing surprising about this decline, the initial Investors simply wanted to get their investments back and make money. They did get it back, all at the expense of Popova Kula.

Popova Kula management made few amateurish mistakes

1. Pushed their company to go public when they were not ready.

2. Asking for Venture Capital without realizing the consequences from such request.

3. Tried to make quick money instead of planning for longetivity, growing and well being of their company.