I currently am evaluating Brekford (BFDI) as I am starting to come across some red flags that are concerning me. I have learned that there is a fine line you have to learn to balance when holding long-term microcap positions in terms of constant due diligence and potentially coming across certain things that may negatively influence your overall investment conviction. After all, microcaps are going to have flaws, that is why they are microcaps! (well, at least most of the time).
Here are a few of the struggles I am having with the position currently:
- I use to have a pretty good line of communication with the President/COO until he recently told me he is "trying to run a business" and that I should address all questions to the Investor Relations firm. I understand this kind of response if I was asking him questions on a daily/weekly basis, but that was not the case.
- After receiving those comments, I built up a pretty good communication stream with the current IR contact. Really nice guy with tons of experience, but for weeks he has been telling me he cannot get a response from Exec Management about the timing of PRs surrounding new red-light cameras that are live but have not been made public via an announcement. This to me is really concerning on several levels. (By the way, this is public info as it was mentioned in previous Q3 report about new cameras "soon" to be going live. Still, given the impact in revenues that each new camera, the company should be communicating these events.)
- I have also learned that the company has been churning through IR firms like butter. Apparently the CEO is impossible to work with and he is wanting these IR firms to "promote" the stock to get some volume. Certainly not a recipe for long-term shareholder returns!
Despite the above, I believe in the business model and the progress the company is making, but the things I note above are weighing heavily on me. This is not a company I would want to be a "part of" based on things I am learning, but as a shareholder I am a part of it-- so ethically it is tearing me up a bit internally.
I will keep you guys posted on what I decide to do with this position.
Feel free to add comments below to discuss similar issues you have had to deal with internally.