Value Ideas Blog
HQ Life and the Story of the Fake Sheikh

Please don’t buy or sell stocks on recommendations of anyone especially not via phone and through a “cold call”. This post is just for education and the authors don’t have a position (long/short) in the stock. We are only trying to state the obvious facts. Always do your own research.

 

In this (somewhat unusual) entry, we want to tell an interesting story that is still relevant. A couple of months ago, a friend of us informed us about the company HQ Life, asking  if we knew anything about it. After a short look we told him that we have never heard of the company before. As we were very busy at this time, we didn’t ask him for more information. Than after a while, he told us that he himself bought some shares and that his father would have some insights. When I met him, I asked him about the insights and he told me that his father was called several times and he was told where the stock would trade at point x and point y and like a wonder, the stock price ended up at exactly that price. The guy on the phone told him he would only earn money if he would send him 5% of the return after his father had sold his shares. This would happen on a trust basis and if his father would not do it, he would be not informed by the company (BAH Consulting) anymore.

 

After a while, his father invested a huge amount into the stock and BAH-Consulting told him that he could get “bonus shares”. The only thing which his father would have to do would be to sign an NDA (Non Disclosure Agreement) and with this inform the biggest shareholder (MCT Consulting & Controlling AG) about the number of stocks he held.

 

When we heard that, we told our friend to directly sell all shares and informed him, that this is a fraud & scam with a 99% probability.

 

After we returned home that night, we directly start to investigate the case. The first thing that hit us was the chart. Have you ever seen something like this?

 

Price chart HQ Life AG

 

If you look at the chart, you see that there was only one major downturn, and this was due to a trading hold in november 2015. On the website the company simply says: ‘EURONEXT has substantially justified the suspension so that additional information about a range of issues, relating to the current activities of the company, could be delivered to the market (for example, changes in the shareholder structure, financial statements, etc.).’ If the stock exchange has doubts about your annual reports and financial statements and makes a trading hold, it is not a small thing. On the other side the management tries to calm down the situation with the following statement. ‘In addition, I would like to inform our investors about the fact that despite the suspension of the trading of the shares, the company’s business was never interrupted at any time during this process. In fact, within this period, both negotiations with potential investors (please note the press release dated 05/11/2015) and the negotiations on the acquisition of promising target companies, were maintained. HQ Life AG will provide further details in due course on the company’s homepage.’

 

Afterwards, we looked at the financial reports which are published on the website and where simply astonished. You can look up the numbers here. The reports are probably the strangest thing which we have ever seen. Globo for example at least tried to hide the fact that they had real problems. These files seem to be totally artificial and there is possibly nothing real behind this company. HQ Life just gave out a DATEV report without any information who has prepare the reports etc. And they simply say:

 

Please note that the figures for 2014 and 2015 are preliminary and subject to change, as well as non-audited and not yet approved by the competent bodies of the Company.

 

You can find a report of the last AGM here, where you can already observe the first strange things. When we started to research the company, it was showing off their “TOP 100” Award. After we have seen the award, we simply called the news company giving out the award and asked them for what HQ Life has received it. Furthermore, we told them about our concerns with regard to the financial numbers of HQ Life. After they compared their own numbers which where handed in by HQ Life and the numbers which where give on the website and asked HQ Life for an explanation this happened:

 

TOP 100 award revoked for HQ Life AG because of violations. The management of compamedia has informed the board of HQ Life AG that their company has been excluded from the current period and the rewards for 2013, 2014 and 2015 have been withdrawn. The reason for the decision are serious violations of the terms and conditions of the innovation competition which have now been detected. HQ Life AG is prohibited from advertising with the awards of these years in electronic or written form or to use image material from the ceremony. [Translated from German]

 

In the mean time, I tried to get more information and found the following news:

KBF Trading & Contracting Co W.L.L. signs LOI with MCT Consulting & Controlling AG on the acquisition of 15% of the shares in HQ Life AG

KBF Trading & Contracting Co W.L.L. Doha, Qatar intends to acquire 15 % of HQ Life AG.

By letter dated 2 November, 2015 HQ Life AG was informed from KBF Trading & Contracting Co W.L.L. Doha, Qatar, represented by Sheikh Kahlifa Bin Fahed Bin Mohd. Al Thani, about their intention to participate with 15% in HQ Life AG.

 

First thing that attracted my attention is that the name of the Sheik was not written correctly. Okay, this can happen, especially as it is a difficult name. We just looked at the website of KBF Trading & Contracting and found that the company has nothing to do with the field in which HQ Life is in. Furthermore, there was noting written about the signing of an LOI. Accordingly, we called them and spoke with the senior manager, who told me that KBF doesn’t know HQ Life at all.

 

Furthermore, we did some research on the only holding of HQ Life: Heizwelt GmbH. First of all, you don’t find and information in regard of the terms of the transaction (no purchase price, revenues etc.) Even in the Bundesanzeiger, you don’t find any information. Then we found in an interesting forum discussion, that Heizwelt is the old ZWS GmbH which already went into bankruptcy.  If you google ZWS, you find a lot of complaints about the company and it seems to be clear, that a 51% stake in a company like this is not worth more than 100 million.

 

To be 100 percent sure, we called all the ex-board-members of HQ Life. In the calls, the old board members explained us that after the accident of the old CEO Dr. Beforth, a swiss company appeared (the current CEO Horst Hermann was their spokesman) and bought all of the shares of Mr. Beforths’ relatives. The swiss company made it clear that they would change the business of HQ Life dramatically and thus, all three board members resigned and dissociated themself from the actions of HQ Life. Afterwards, all companies which where part of HQ Life were sold or discontinued, but you don’t find something about this on the website. Furthermore, the office of HQ Life was relocated into a single family house in the middle of nowhere.

 

How do they make money?

So the question is how they make money with their approach. Basically, the people behind the scene bought the stocks very cheaply, in the case of HQ Life for a couple of cents. Afterwards, they contact people like the BAH Consulting which are responsible to push up the share price by doing cold-calls, write in stock-boards etc. to manipulate the share price upwards. For this service, they pushers are paid in shares which are than sold to normal people who believe in those guys. Thanks to Mr. Neumann from the SDK, we have a presentation (in German) which explains the approach quite straight forward. (Vortrag_Niedersächsischer_Aktienclub_Uelzen)

 

We forwarded our findings to the Amsterdam Euronext and thanks to their work, HQ Life is again held from trading. Nevertheless, the people from BAH Consulting still try to sell their shares at ‘preferred prices’ via the phone. We hope, that we could help to bring some light in the dark and safe some people of this kind of scams in the future. You can help us if you share this article and by telling people which usually don’t use the internet to not react on any kind of ‘cold-calls’. If you should be a shareholder of HQ Life, I would recommend to directly go to the police, you have a good chance of success, as the company and management is based in Germany. Thank you very much!

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