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So you’ve probably heard of the deli across the river from Philadelphia International Airport that sells about $18,000 a year worth of sandwiches and the like (except when it doesn’t) and which is nonetheless worth about $100 million. This, of course, raises a number of questions, although the main one seems to be, “What the hell are you talking about? How can that be?”

Another question that seems worth asking is, “Why the hell does a South Jersey deli with a gravel parking lot alongside a freight rail line sharing a building with something called the ‘New Jerseys Got Talent School Of Performing Arts’ have 7.8 million publicly-traded shares, a Nevada incorporation, a Hong Kong-based chairman, and shadowy shareholders in that city and Macau in the first place?” Well, it seems sensible to try to answer that question by looking to the top, and, dear reader, you will probably not be at all surprised by what you find there.

A key investor in the mysterious $100 million company that owns only a tiny New Jersey deli has a history of legal woes and ties to several people who have criminal convictions or have been sanctioned by regulators…. [Peter] Coker Sr. has himself been sued for allegedly hiding money from creditors and business-related fraud…. His partner in Tryon Capital, Peter Reichard, in 2011 entered a plea in a criminal case that led to his conviction for a scheme to illegally contribute thousands of dollars to the successful 2008 campaign of Bev Perdue, a Democrat who was elected that year as North Carolina’s first female governor.

Not that the allegations are all business-related.

In August 1992, the then-49-year-old Coker Sr. was arrested in Allentown and charged “with prostitution and other offenses after he allegedly exposed himself to three girls as he drove around Central School….” Coker Sr. drove up to two sisters, ages 14 and 10, and their 15-year-old cousin as they sat on their porch near an elementary school, and “called them over to the car and tried to proposition them.”

There’s so very much more in that CNBC report, but now seems as good a time as ever to note that Coker Sr., his son and their partners do not control a $100 million deli. As old friend Matt Levine points out, they control a nearly $2 billion deli, which you should probably consider before loading up on HWIN shares over-the-counter.

The simple valuation math is that Hometown is worth $13.01 (yesterday’s closing price) times 7.8 million (the number of shares outstanding), or about $101 million. But ordinarily companies are valued based on their fully diluted equity value, taking into account stock options and warrants. Here, there are 7.8 million shares, but also an absurd 155.9 million warrants. That represents a fully diluted equity value of almost $1.9 billion…. As far as I can tell, the warrants do not trade with the stock. The result is that if an insider of Hometown sells you his stock, he keeps warrants to buy 20 times as much stock at way-below-market prices.

Key investor in $100 million NJ deli has a history of legal problems, ties to criminals [CNBC]
Actually It’s a $2 Billion Deli [Matt/Bloomberg]

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