Paulsboro is small. It’s a borough of about six thousand people along the Delaware River in New Jersey, and yes it is named after a long-dead guy named Paul. Philadelphia International Airport is just across the river, and the borough is home to a variety of industrial businesses—and, sometimes, a variety of industrial smells—as well a busy oil port. Paulsboro is known for several things besides essential and charmless industry. It’s the hometown of Flipper Anderson, the NFL record-holder for most receiving yards in a game with 336. Kevin Smith filmed parts of Jersey Girl there. Fort Billingsport, located in Paulsboro, was the first land purchase made by the United States government.
But ports and forts and lesser Kevin Smith movies aren’t the really special thing about Paulsboro. Flipper Anderson had a nice NFL career. That was nothing compared to the success of the Paulsboro High School boys wrestling team. The high school is small; in the 2019-20 school year it had just 345 students, 197 of them boys. Despite this, it routinely defeats teams from larger schools. It has had 27 individual state champions and has won 32 state team titles. The school’s team record through 2019 was 1177-89-12. It hasn’t lost a conference match since 2011.
Paul Morina has been Paulsboro's wrestling coach since 1985. His teams are 700-43-4, per paulsborowrestling.net. His athletes' devotion is legendary. “You wear that ‘P’ on your chest, it means something,” one Paulsboro wrestler said last month. “You have to dig deep and never give up, no matter the score. We let the people up there, virtual or in person know we’re Paulsboro and we’re ready to roll.” One former New Jersey wrestler, who did not attend Paulsboro, told me he once accompanied Morina’s team on a trip to a wrestling camp. At night the kids had free time. The Paulsboro wrestlers pushed back the beds and wrestled in their hotel rooms while the coaches bet on who would win.
Morina is also principal of Paulsboro High School. But he has another, even more impressive-sounding job. Morina is CEO of Hometown International, a company whose stock price (Ticker: HWIN) valued it around $100 million. What makes Hometown International’s valuation so strange is what the company does, which is operate a single deli in Paulsboro that is open for 32 hours a week. Last year, that deli was closed between March and September and did just $13,976 in sales. Yet despite doing less in sales last year than the Defector merchandise store did on its very first day of operation, the stock values the firm at the same price that Apple spent on a virtual reality company last year. A whole New Jersey amusement park just sold for $2.37 million.
The deli's name is Your Hometown Deli, which even sounds like a generic placeholder name. The sole asset of Hometown International first came to public attention in a letter to clients from hedge fund manager David Einhorn. His firm, Greenlight Capital, lost money last quarter (while the S&P 500 returned 6.2 percent). Several of Greenlight’s short positions ended up being tremendously bad bets during the GameStop frenzy earlier this year; Einhorn needed some scapegoats to explain why he lost money this quarter while doofuses like me were making thousands on stylized videos of NBA highlights. He found plenty, unsurprisingly, but most of Einhorn's ire fell on regulators. Hometown International made for a useful example, there:
Someone pointed us to Hometown International (HWIN), which owns a single deli in rural New Jersey. The deli had $21,772 in sales in 2019 and only $13,976 in 2020, as it was closed due to COVID from March to September. HWIN reached a market cap of $113 million on February 8. The largest shareholder is also the CEO/CFO/Treasurer and a Director, who also happens to be the wrestling coach of the high school next door to the deli. The pastrami must be amazing. Small investors who get sucked into these situations are likely to be harmed eventually, yet the regulators—who are supposed to be protecting investors—appear to be neither present nor curious. From a traditional perspective, the market is fractured and possibly in the process of breaking completely.
I saw this paragraph when Bloomberg TV’s Joe Weisenthal tweeted it on Thursday. He was as confused as Einhorn. I knew it was time to do some reporting and get to the bottom of this. Forget pastrami. They root for the Philadelphia Eagles in Paulsboro; how was Your Hometown Deli’s cheesesteak?
While I made plans to visit the deli on Friday afternoon, I began to do some research into the Hometown International. Its SEC Form 10-K, an annual report on a company’s finances required of public companies, is available online. Einhorn’s summary was correct. This $100 million company owns one deli with low sales numbers. It is incorporated in Nevada. The largest shareholder is the CEO/CFO, Morina, who does not take a salary. The Chairman of the Board is Peter Coker, a businessman once based in Macungie, Pennsylvania. Other shareholders include firms in Macau and Hong Kong. The company’s vice president is Christine Lindenmuth, a Paulsboro High math teacher. (My wife is a high school teacher. I asked her why she hadn’t taken an unpaid VP job at a $100 million company in her spare time. We will update this post if and when she responds.)
But the filing was strange for other reasons, too, and not just because it gave a different career record for Morina than paulsborowrestling.net. “The analysis of new business opportunities will be undertaken by or under the supervision of our executive officers and directors, none of whom is a business analyst,” the company says in its filing. The $100 million company also advertises in a local high school sports calendar and “various political fundraisers.” It says it also uses Facebook “to describe the quality, atmosphere, products, specials, customer opinions and general information about the Your Hometown Deli’s operation.” (The company gets 2-6 likes per post.)
Despite the pandemic, the company privately sold 2.5 million shares of stock for $2.5 million in April of last year. Last May, it began paying Peter Coker Sr.’s Tryon Capital Ventures $15,000 a month in consulting fees. It also started paying VCH Limited, a Macau company that is also a shareholder, $25,000 a month. Hometown International expected these fees to continue through 2021—if they continued in business at all, that is. “These factors raise substantial doubt about our ability to continue as a going concern,” the filing reads. “If we are not successful in expanding our Your Hometown Deli concept, or finding a business to merge with, we may need to cease our operations, which would result in our shareholders losing their entire investment in us.”
I needed someone to make some sense of this. I called up John Longo, a Rutgers Business School professor and the chief investment officer of a firm with $2.3 billion under management. “The stock seems overvalued on any reasonable metric,” Longo told me. “There’s a disconnect between what the business does and what it’s valued at.” Longo said the stock had a small public float—the percentage of ownership that trades on the stock market versus the percentage held by other investors. (Fewer than 20 percent of the shares in Hometown International are traded publicly.)
“Looking at the 10-K, they don’t really talk about why the store may be unique,” he said. “It’s not like it’s going to be the next Starbucks.” The filing did say they might merge with company; some have speculated it might be a pseudo-SPAC that is just taking the form of a small town deli. But Longo wondered, quite reasonably, what company would possibly merge with a tiny New Jersey deli.
But I was still interested in the deli. SEC filings don’t usually make the mouth water, but Your Hometown Deli is described as “a delicatessen concept that will focus on providing high-quality food products not available in local supermarkets or take-out restaurants.” I was intrigued. I am an incredibly picky eater and rarely get excited at the idea of going out to eat. But I knew I had to get to Your Hometown Deli ASAP—if only to eat there before it closed for good.
I did not get the chance. Despite a flag proclaiming the deli “open,” it was not. The blinds were closed and the lights were off. I would not get my chance to try the best darn cheesesteak in South Jersey on Friday. As I drove around Paulsboro to find a place for lunch, I got a whiff or 10 of that Paulsboro industrial smell. But something else stunk, too. As it turns out, the deli was actually open earlier in the day. CNBC reporter Dan Mangan filed a story later that day that mentioned he’d called Your Hometown Deli that morning.
A woman who answered the phone Friday at the deli asked, “Would you like to place an order?”
She then hung up after the caller identified himself as a reporter and said he wanted to speak to someone about Hometown International.
While I’d like to think that Your Hometown Deli closed up because they were scared of my reporting—hey, Ice Cube was once too scared to take my questions—it seems more likely they just closed for the day after getting calls from reporters. Hometown International's story was starting to make news locally and nationally. Channel 6—if you’re from Philly, you know this is The Big Station—showed up in Paulsboro asking questions. The Inquirer wondered if it was another GameStop. The Wall Street Journal wrote about it.
And while CNBC’s Mangan ruined my lunch plans, it was worth it for what he uncovered in his story. A since-disbarred lawyer, Gregg Jaclin, was listed as an attorney in early financial documents for Hometown International. Last year Jaclin pleaded guilty to conspiracy and obstruction of justice; the SEC said he set up schemes to take shell companies public and sell them for a profit. Like Hometown International, these companies were based in Nevada.
Hometown International has not been accused of any wrongdoing by the government. But in 2015 the SEC wrote to Hometown International: “We believe you are a shell company.”
I spent the rest of my Friday attempting to contact someone, anyone, to talk to about this deli. I could not reach Morina, Lindenmuth, Coker Jr., or Coker Sr. The company's auditors, Liggett & Webb, did not return a request for comment. I pivoted my investigation to the question of whether the food was any good. The deli is next to the Paulsboro Wrestling Club, which sometimes hosts events for The Monster Factory, a well-regarded pro wrestling school. But according to Ring of Honor announcer Ian Riccaboni, who previously announced at Monster Factory events, the place was rarely open. “It existed," he told me, "but wasn't open when you might think it would be beneficial to be open, like before a Monster Factory event.” (This, despite this sentence in the SEC filing: “The Company believes that the attendees of Monster Factory wrestling events are potential customers for Your Hometown Deli.”)
I did find a person who could attest to the quality of the food. Jason Auxer, a Richmond resident who previously lived in South Jersey, called the food “awesome.” The turkey and cheese hoagies were his favorites, and it was enough of a regular spot for him that he made one last trip before moving. “Last work trip before COVID I went up there and made sure I stopped by and got a hoagie from Hometown Deli,” he said. The deli is next scheduled to open on Tuesday at 11. I am going to try again.
Meanwhile, shares of Hometown International plummeted on Friday—at first. Down 34 percent by late morning, HWIN rallied in the afternoon. (Closing the deli worked!) It ended Friday down just 5.53 percent. By the end of the day, the company was still worth a little more than $100 million. As of this morning, it was up another 3.77 percent. Just another week in the modern business world.
