CEO and Chairman of W.A.B. Capital William Block launched his firm in 1997 in order to fill a gap in the public equities market that called for a company to conduct research on micro-cap stocks and exposure the research results to investors and portfolio managers. Unlike investment relations firms, W.A.B. Capital focuses on simply matching companies with institutional investors. Additionally, William Block and his colleagues retain a unique sense of objectivity. As their investors are their highest priority, the firm’s representatives will encourage investors to sell stock if they feel its valuation is decreasing.
In order to fully back companies they support, William Block and his team thoroughly investigate each company. This investigation takes several weeks and begins with the review of press releases, U.S. Securities and Exchange Commission filings, and product or service information. The next step entails a teleconference with company management during which W.A.B. Capital asks questions about finances and business. If the answers are satisfactory, the firm will move forward. William Block or a member of his team then visits the company personally, asking questions about all parts of its operations. The firm follows up by interviewing suppliers, customers, and other related parties.
Once W.A.B. Capital has found the company to be in good standing and with great potential for increased value, William Block allows his firm and the company to go on a four-city tour, meeting with investors in Los Angeles, San Francisco, New York, and Boston. During this step, companies typically see a major increase in stock price as investors buy stock and then inform fellow investors of the new opportunity. In one recent example of success, Acacia Research saw its stock increase from $32.20 to $44.00 as a result of William Block and his firm’s assistance. W.A.B. Capital was also responsible for Muddy Waters Research getting off the ground.
W.A.B. Capital was doing an analysis of Orient Paper with the idea of recommending the stock as a buy. William Block asked his son, Carson, who lived in China, to visit their plant. Assuming Carson liked the company, Mr. Block planned to fly to China to meet with the firm’s management. Carson and his friend Shawn Reagan, who has owned three factories in the Far East, visited Orient Paper’s plant and immediately concluded the company was a fraud. Carson and Shawn did in-depth research on Orient Paper, ultimately publishing a 32-page report on why the company was a hoax. The report, originally mailed to 50 people, most of whom were William Block’s clients, created a multiplier effect. The stock dropped from $8.50 to under $4.00 within two weeks, and has never recovered. Since then, Carson Block has identified as frauds four other Chinese companies, including Sino Forest, the stock for which dropped from $19.00 to under $5.00. Carson has been written up in The Economist, the Wall Street Journal, Barrons, and The New York Times. He has also appeared on Bloomberg, CNBC, and Fox Business.