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IVFH--Bought more at .80 a few weeks ago and getting some fills today at .77. The food and beverage sector is an extremely hot M&A vertical where both strategics and PE funds are paying very high valuations. Unfortunately, I don't think the CEO would be an opportunistic seller as this seems to be his baby.
If they announce a .003 dividend I'm guessing the share price increases to between .0055--.006. On the ex-dividend date the price would drop to .0025--.003. I think that would be another attractive entry point as I see at least .005 in further distributions.
Just a WAG but I'm thinking the first dividend will be announced this week.
Some early volume aggressively beating down the share price. Sure feels like shorts at work again.
They did have to decrease their pricing on their primary unit to be competitive. The only reason I can think for a short position is that the company cost structure may prevent profitability until very high revenue levels. California isn't the cheapest place to operate a business.
Regarding yesterday's PR does anyone have a sense of the price per unit to estimate revenues from the order? I believe this was their low cost unit.
Myth--Thanks for putting a finer point on the value of a filing shell distanced from liabilities. More is better. I was primarily trying to make the point to Tony that they won't be able to "sell" their tax loss carry forwards.
Price ticking up today which is great to see.
I was recalling a link you found online a few months back that had filing shells for sale in that range.
Tony--
I think they're making sure they can retain the tax losses for the purpose of using them to offset at least some of the gain from the asset sale. After that, I don't think they have any other use for them nor can they "sell" them because they're lost on a change of control. No one is going to drop assets in or merge in a company with valuable assets without assuming control which would eliminate the tax losses. The only residual value is I think is their SEC filing status which I think could be worth around $175,000 based on an internet search.
Keep in mind that the tax losses disappear if there's a change of control transaction so there's no way to have a third party assume them.
It might be shorts or it could be a long building a position who dumps a few shares at market close to mask the strong day today. Seems odd that there was a strong bid all day that disappeared just before the close. Maybe the buyer just pulled his bid hoping for a pullback so he can start bidding tomorrow at a lower price.
Really strong action today. Great to see.
Of course, POLA up on a down market day. Short activity seems to undermine correlation with broader market.
CBAI .0044 Think this is a great arbitrage opportunity. They just closed on the sale of substantially all assets to third party for $15.5 million and retained $1.2 million in cash. $3 million is in escrow for two years to cover contingent claims that might arise although there are no disclosed lawsuits pending nor did plaintiff lawyers contest the asset sale so seems clean so far.
There are 1.273 billion shares outstanding so including the escrow money they're holding .013 per share in cash. They'll have some transaction costs for the asset sale and some wind up costs for closing the company down. They'll also pay tax on the asset sale proceeds although they have some applicable tax loss carry forwards. I don't know their tax basis in the assets or the applicable tax rate (20%?).
They've already announced an initial special dividend of between .0025 and .0035 within the next 90 days. Assuming a purchase of shares at .0045 and a .0030 initial special dividend, you have .0015 per share at risk after the dividend and the prospect of receiving at least another .0075 in dividends before it winds up after the escrow period expires in two years.
CBAI is controlled by 30% owner Red Oak, an SEC registered investment advisor who took their position and control of the Board as a white knight a few years ago. They have been very straight up throughout their entire involvement, so I think the risk of fraud etc. is very small. Seems like low risk with the prospect of a high return for patient money. The risk is that some unknown (and, as yet, undisclosed) claim/lawsuit/contingency etc. ends up draining cash and lowering the cash return.
I have no real idea but it sure feels like shorting is continuing to affect the price action. The alternative is that buyers are bailing which seems inconsistent with the outlook. If you're long because you believed in the potential would you give up now?
Is it just my small/micro cap portfolio languishing today or has the suspension of the trade war caused a rotation out of small caps back to multinational large caps?
POLA up to 52 week high on huge volume. Short squeeze in full play.
Looks like short squeeze is in full play
Did everyone see announcement that deal actually closed yesterday? Escrow is $3 million and first distribution within 90 days.
The deal closed!
POLA Surging today on high volume following recent Q1 release showing modest sequential increase in sales but impressive backlog jump. The short interest rose 30,000 shares in the least report, so I'm guessing shorts now having second thoughts about coming quarters given backlog increase, ramping sales from AT&T and a reinvigorated Verizon and first international and military sales. Admittedly, this has been a "late bloomer" but there now seems to be sales traction and the prospect for continuing sequential sales increases in coming Qs. When healthy earnings can be generated isn't clear, but they have significant operating leverage which should improve margins and profitability as revenues ramp. For now, I think healthy sequential revenue increases will be sufficient to drive the share price especially since they burn little cash and have a pristine balance sheet.
IVFH Bought a bunch at .80 yesterday so will see how that goes.
I'm encouraged the stock held up yesterday. Q1 revs weren't great but backlog was encouraging. I think backlog makes it a more dangerous short play now so see short shares declining materially this Q which is good underpinning for the share price.
Since their path to $10 million in quarterly revenue, good margins and impressive profitability is taking longer than I hoped, I think the biggest risk is that the overall market tanks before they get there and the share price won't reflect their success.
POLA reports after the bell. We'll see if they can build on improving sales last Q.
I think $6 million is the over/under on revenues. Above $6 million POLA surges. Below it will sell off. That's my WAG.
I think it was encouraging they reaffirmed expected Q2 closing. Otherwise, operating results were in line with recent Qs.
It's hard to imagine the deal won't be approved as there has been no effort to oppose it. The interesting question is whether the share price will rise appreciably when approval is announced or the market will still want more assurance about to timing/amount of distributions.
Class action lawyers monitor these types of transactions carefully and are quick to sue to get lead position if they see anything the least suspicious that could be a basis for a claim. So far there's been nothing which is encouraging. Of course, it could still happen later which is probably the major reason they don't want to do large first distribution. Beyond the escrow amount they also need some reserve for legal in case there's a fight over escrow proceeds. I'm guessing there will still be a larger second distribution within 6 months of the first if all is quiet with the buyer and there's no class action litigation.
I agree continued shorting at this share price is unnerving. I get concerned that some people may have visibility on RFPs and other pending orders and some may have not come through. Still seems odd to me that shorts think a company with no debt, lots of cash, small cash burn, modest market cap and huge global market opportunity is a good short. Seems like a risky bet unless they know something specific.
It makes me feel queazy when a stock starts sliding before earnings so it was great to see the rebound today. On a thinly traded stock like POLA sometimes price movement is more about the selling motivations of a few shareholders which may be totally unrelated to their assessment of POLA's prospects going forward (e.g. paying a college tuition bill, putting down payment on house etc.).
APWC KIK I have no news. Just languishing as usual with no drivers to spark buying interest. Don't think that recent offer to buy shares at $4 is meaningful because parent is majority owner. Earnings always unpredictable driven as much by FX, change in copper price, receivable writeoffs as by unit sales. They report a strong quarter and the share price could recover some, but I think this one is a classic example of a value trap.
When I pull up the quote for POLA on etrade, there's a bar at the top that says "Q1 earnings are expected to be released after market hours on 4/30/18". I don't know what their basis is for posting that.
Makes sense that the "extra" volume of 50,000 shares in short covering over that 2 weeks was the catalyst for the price surge. Now it feels like short covering has subsided and the bulls have placed their bets before earnings and the price will hover until the release.
I see increasing interest rates to more normal historic levels as being a bullish signal--like taking a patient off life support. IMO the Fed should have moved sooner. The tax cut and ballooning deficits provide plenty of stimulus to an already healthy economy. A flat yield curve could be a negative for banks and other financials but otherwise shouldn't hurt stocks. Don't think gradually higher interest rates will either. Some pundits have already started predicting a near term top and recession. I don't see that happening any time soon (before 2020). If higher yielding bonds become a bigger part of individual portfolios, it could also stimulate personal consumption which has been an elusive component of the current expansion.
Holter-- I think you're getting confused by wondering how much you're being offered for your shares. You're not being offered anything. You're being asked to approve the sale of virtually all the company assets at a price of .012 per share compared to Friday's closing price of .0043 per share. If the transaction is approved and closes the company has said it will make an initial distribution to shareholders of between .0025 and .0035 per share. Assuming an initial distribution of .003 per share, the company will still have .009 per share in cash before closing costs, taxes and any other liabilities. Separately, the company has $1 million in cash which it will retain so let's assume that $1 million is sufficient to cover closing costs, taxes and other liabilities including the cost of dissolving the company. We know .0015 of the .009 per share must be held in escrow for two years which still leaves up to .0075 per share for potential distribution during the two years prior to any final escrow distribution. Assuming the escrow is untapped and ultimately distributed, there would be total distributions of .003 + .0075 + .0015= .012 per share compared to the current share price of .0043.
Assuming the transaction closes I think the biggest risk in terms of potential liabilities is whether there's litigation from a third-party in the company's sordid past, from plaintiff lawyers trying to exploit the transaction or maybe even from the buyer after taking over the assets and finding something he doesn't like. So distributions to shareholders could end up lower because of litigation expenses but I still think this is a great arbitrage opportunity.
NAP--Out at 4.59 after averaging down to 3.71. That was a wild ride that ended well. Now the dividend yield is at a level of much better established and more stable MLPs, BDCs and REITs so think it is now at or above fair value.
Share price bounced back nicely today. Recent price plunge seemed like an overreaction to news of lower initial distribution following asset sale.
Per etrade earnings to be announced 4/30 after hours
Don't understand why shorts wouldn't have unloaded in the 4's. Do they think a company with no debt, lots of cash and little cash burn (despite huge expense ramp and lousy recent sales results) is going bankrupt? The shorts won their bet that the company would stumble. Doesn't make sense they wouldn't cash in and move on. I'm guessing next short report will show significant decline which is contributing to recent share price increase.
I'm not in any way affiliated with Red Oak or know anybody there. All I know is based on online filings etc so take it FWIW. I was surprised that the initial expected distribution is so low especially given the escrow. But remember that the escrow is for the benefit of the buyer and can't be tapped for any company liabilities. Nothing has changed except that the timing of distributions will be slower than we expected. While anything is possible, I'm not realistically worried that Red Oak is going to inappropriately divert sales proceeds. I'm only a little worried there may be some liabilities we haven't considered beyond transaction fees and taxes.
I think shareholders ultimately will still get proceeds in the .0085--.01 range, it will just be more back ended. I think Red Oak is just being super conservative in case of unexpected liabilities. Also, it could be they're timing distributions over time to spread out the positive impact on their hedge fund returns.