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Why not aim for a TZ-PC type run?
Float is comparable only CLHI actually has substance and participates in hot end markets.
Tomorrow would be a good day to release news
Of course, the sooner the better, but at least then there's a couple of days for the news to percolate in the markets before Christmas.
It's unclear to me if we're just waiting on TDS' lawyers to submit paperwork or if someone in DE needs to stamp their approval. If one of the process experts on this board could let us know, it would be appreciated.
Been buying at $1.10
The ask walls are fake and will get blown through once the anticipated news hits. Even more convinced of that after my experiment this morning.
Also very convinced based on the appreciation of "story" stocks with much less substance and inferior business models that this stock is woefully undervalued here.
Patience will be rewarded.
Going to get very interesting
Once the merger formalities are taken care of in DE, which should be imminent. Then management can highlight all of the interesting aspects of the story: B2B and B2C data, data management, AI+IoT+5G, acquisitions etc. Lots of story stocks are getting bid up to sky high valuations with much less substance than CLHI/TDS.
Key trigger
The filings that make the merger "official" are the key event to trigger the dominoes. Just a matter of time, but that offers opportunities for new entrants.
Mkt Cap per employee
Another "spin" on valuation that is particularly appropriate for tech companies is market cap/employee given the importance of human capital. Consider this:
Market cap/employee and expected revenue growth (next fiscal year) (in millions)
$NOW: $46.5mm, 89%
ZoomInfo: $13mm, 28%
Datadog: $23.4mm, 36%
Palantir: $18.4mm, 32%
Public Comps (updated)
Stock Price Mkt Cap (in bn) Shares (mm)
SNOWFLAKE $334.25 $94.6 283.10
ZoomInfo $42.85 $16.7 389.31
DATADOG $107.72 $32.8 304.53
SPLUNK $165.89 $26.8 161.72
PALANTIR $25.97 $45.2
Formatting didn't quite work out like I intended, but the second set of numbers are the ones to pay attention to. The market caps are understated too as they most likely aren't fully diluted (pulled up the data in Excel using Bing and the stock data type).
Focus on the catalysts
Fade the noise and focus on the catalysts. I've never found a stock, particularly the ones with massive return potential, that didn't confront naysayers. In fact, if there weren't detractors, I would be concerned. As their concerns dissipate, they will either fade away or convert to buyers. Stocks almost always need to climb a wall of worry to get to their destination. Otherwise, you end up with a parabolic move that isn't sustainable and the stock lacks a solid investor base.
Keep the following in mind:
- The private funding round valuation in the Summer was likely well north of $250mm and that valuation has only appreciated thanks to $NOW and other comps trading higher. Remember, they targeted a 30mm GBP raise (~$37mm USD at the time).
- Private funding round was prior to the revelation of a number of value drivers: AI, US B2B database, Creditsafe etc. In fact, we know from the mission statement slide in the investor deck, which was likely prepared for the aforementioned funding round, that the mission has broadened significantly to include the "world market" for data services. What makes that broader vision credible? Starting the NY office, the aforementioned acquisitions, broader tech stack etc.
- We know from the COO's comments that they will unveil a data platform that targets not only B2B marketing, but data management in general. Bigger addressable market + credible management team= bigger market cap all else equal.
- Company obviously doesn't intend to stay on the OTC for long. To uplist, they will need a markedly higher stock price and market cap to be appealing to institutional investors. We have every reason to believe that Mr. Stephenson and their accomplished CFO understand this and will do the appropriate things to get there. They have taken a cautious, methodical approach to this point while trying to keep CLHI shareholders informed. The cryptic tweets have been frustrating at times, but they were necessary given the hurdles that needed to be overcome.
- Expanded investor set. Let's not underestimate that many US brokers (like that small one Fidelity:)) simply won't allow their customers to buy this stock. That will change soon.
I'm looking forward to seeing the floodgates open once the DE filings hit and the other dominoes start falling.
I'm confused
So, you're saying the paperwork is done? The DE SOS filings should drop at any moment?
I figured as soon as they hit
You'll report it to the rest of us. Utmost confidence in you.
Implication?
Meaning they're waiting on DE filings?
Was the seller cleared out?
Hard for me to tell.
That post made no sense to me
A clarification would be appropriate.
Delays weren't management's fault. They're doing the best they can to keep us informed IMO.
Agreed
I think the cleansing process took place this week and provided a great foundation for the next leg up. Up to the company now to check off the boxes, which I have no doubt they're trying to do.
Perfectly fine to highlight valuation potential now
It's perfectly fine to express an opinion about where the stock is going and the valuation it could achieve.
The stock appears to be in a holding pattern simply because some are waiting for the INEVITABLE updates that are forthcoming. Some are wise enough to get in early and others will wait until everything becomes clear.
Chart comparisons are interesting
I'm more of a fundamental investor, but those are interesting nonetheless. I brought up the public comp aspect for a couple of reasons. First, the relative market caps, which many have highlighted previously. Second, we have a strong universe of acquirers at the right time.
I don't believe Stephenson is interested in selling anytime soon and wants to build this company up for a while to achieve "full" value. That said, a potential takeover ultimately provides a valuation "floor" for the stock well north of where we're trading.
OTC stocks (as you and others on this board know) are driven by news flow so it will be very interesting to see how the stock appreciates once we start getting PRs, filings etc.
Acquisition target
Given the public comps all have strong stock prices and rich market caps, it's quite likely that once the company reveals its technology in greater detail, TDS/CLHI becomes a takeover target. The big players (SNOW, DDOG, ZI, SPLK) can all use stock or cash to do deals. I think ZI, in particular, could be a suitor in short order given the product gaps that TDS/CLHI could fill.
I think the ask wall is fake
MM suppression IMO in a thin tape.
On the positive side, seems like the weak sellers were cleaned out after yesterday.
Waiting for the information catalysts to start playing out...perhaps management teases us with another slide from the investor deck.
I noticed IoT too
Nice job linking that back to Infuse and their founder. The volume of data created by IoT sensors and other devices is going to be almost overwhelming for many companies. Having a strong data management and analytic platform is going to be critical.
This company is certainly in many of the sweet spots with seemingly great assets. Anyone that considers the current price as capturing anything more than a fraction of the underlying value doesn't really understand tech or this company.
Not sure what you're talking about
The delay had nothing to do with TDS. There were snags with the judge and Mr. Berry had to put together a shareholder vote in a very short time frame, which he did (thanks to help from people like Pro on this board). It is unfortunate that it took this long, but I'd say once the problem was discovered, the process got back on track very quickly. Moreover, the snags experienced with this merger have been experienced in others like $THC. Nothing unique to CLHI/TDS. We were dealing with Covid too, which has impacted the UK perhaps even more so than the US.
Couple months delay to reap the rewards that have been experienced already and much more to come is fine by me. I have a position in the seven figures and am happy to wait a relatively trivial amount of time to realize the ultimate gain.
That was slide 14 too!
I wonder what shows up in the deck before that.
I'm looking forward to learning more about the US B2B database acquisition and any updates about Creditsafe too.
Please take at look at the slide revealed in the latest tweet
Let it sink in. This company is much more than ZoomInfo, it's a combination of ZI, SNOW, DDOG and perhaps even Splunk.
The investor pack is going to blow people away.
Agreed, many can't even buy yet
Going to be "neat" (to borrow a word from someone we all know) to see the stock price once a broader swath of traders/investors (hopefully more of the latter) can buy the stock after stop sign removal.
Just imagine when an actual PR hits
And there will be multiple PRs in relatively short order I suspect. Going to be fascinating to watch the chasers get hit with the FOMO bug.
Good bid support today
L2 has been very interesting this morning. Very strong bid support just below $1. Looks like there's buyers ready to take shares off weaker hands.
Any updates on the DE SOS filings?
Highly compelling story
There's so much to this story that will be unwrapped and serve as positive catalysts for the stock. The counter arguments, at this stage, have little merit.
The company obviously isn't putting together an investor pack to satisfy OTC traders. They have much bigger aspirations, as evidenced by the acquisitions we already know about. They've also built a management team and advisory board that is Nasdaq worthy.
Just have to start checking off items on the catalyst list..
Valuation- based off of FUTURE expectations
I've raised this point before, but valuations for high-growth companies in hot sectors are driven off of future expectations. Those expectations are based primarily on the attractiveness of the end market and the company's assets (intellectual property, human capital etc.). This is particularly true in the early-stages of the company's development. If venture capital valuations were driven off of trailing financial statement metrics, valuations for private companies would be a fraction of what they typically are and there would be no "unicorn" companies.
Management has a huge role in setting future expectations by telling a good story to potential investors. This is what the investor pack that the company alluded to yesterday will help do.
Typical OTC price movement
Just need some information catalysts to spark the next leg higher. Fortunately, TDS has an abundance of catalysts to deliver soon.
Acquisition targets- big value drivers
While I don't believe Infusemedia has been confirmed as one of the targets (circumstantial evidence supports this), and perhaps it's a licensing deal for the largest US B2B database, the underlying company seems very impressive (and has been recognized as such by Inc magazine multiple times):
https://infusemedia.com/
The other mentioned target, Creditsafe, is also very impressive and provides a great complementary opportunity to TDS' core business. I'd also add that management mentioned that Creditsafe generates $40mm in annual revenue.
From Tweet dated 9/29/2020:
Update: TDS management is currently negotiating to acquire one of the largest Payday (Ping-tree) corporations in the USA and U.K. Current turnover is around $40+m with over 1m leads generated every week, we will double this in 18months #Creditsafe
https://www.creditsafe.com/us/en.html
Long time followers know of these deals already, but worth re-iterating for newer holders. These deals will be huge catalysts in their own right for the stock, but management has had to remain quiet about them for obvious reasons. That said, the hashtag "acquisitions" did appear in a tweet dated 12/10/2020:
Message just in: We are now waiting on our attorney to review docs and everything should be able to move - From our CEO, Robert Stephenson #thedatasource #otc #OTCMarkets #otcqb #NASDAQ #acquisitions #data #DataAnalytics #datastorage #datamanagment #blockchain
New tweet...
Looks like we'll get an "official" update soon.
Update - Everything is going well, we are just waiting for the documents from last week to bring everything current. When we have everything in hand we will update with more information
Share structure
I previously raised a similar point. Whatever shares are issued to TDS investors, employees and acquisition targets (B2B database, Creditsafe) will be restricted for a certain period (usually at least six months). It's possible they won't be registered until the company uplists to ensure better liquidity for those investors too.
As a result, the float will remain very small in relation to the total OS and that will make the shares scarce. As I also said previously, this will likely lead to the share price overshooting "fair" value on the upside.
TDS liked a tweet about releasing a PR
Perhaps we'll finally get a PR from the company that ties it all together.
Highly doubt he'd be of any value..
Even if he responded. He probably has buried the former company in his mind and wouldn't want to talk about it given its demise. I also can't imagine he knows anything that we don't already know about TDS.
TDS is working hard to get information ready to be released. I firmly believe that, but they will do everything "by the book". Might as well not run afoul of regulators at this point given the time it's already taken. This is particularly true given their obvious desire to make the OTC a pit stop on the way to listing on the Nasdaq.
We all just have to be a little more patient until the slew of information updates hits.
NOLs
I asked Ben Berry about using the NOLs, but he wasn't able to confirm whether they carry forward in the merger. Not his area of expertise, so I didn't fault him for that.
I would say that given the company wasn't properly dissolved, the tax attributes (ie. the NOL) may persist for TDS' usage. Some caveats about NOLs;
1. There are limitations on usage in an acquisition. Doesn't mean they don't have value, but TDS' ability to use them will be subject to annual limitations.
2. To the best of my knowledge, the NOLs apply only to US-sourced income. Probably won't be a problem given TDS' contemplated acquisitions seem to be focused on building up their US operations.
3. NOLs economic value is actually the tax rate multiplied by the gross net loss. This is typically what you see labeled as "deferred tax asset" on the balance sheet. Sometimes the deferred tax asset is written off because the probability of utilizing them is very low (ie. if you're a persistent money losing business), so you have to dig into the notes to the financial statements to find it. I would also keep in mind that federal tax rates have come down since the prior company existed, so the value of the NOLs has come down some. Still potentially very meaningful, but keep that in mind.
Not saying that I don't think the NOLs could have value, but just wanted to caution against ascribing too much value to them until we get more information.
Looking forward to checking off items on the catalyst list in the next few weeks. I have to imagine Mr. Stephenson is very anxious to get the company listed and take advantage of the "free PR" of being a public company.
Here's a list off the top of my head
By no means comprehensive, so others that have been significant contributors on this board (too many to mention, but we know who they are) should chime in (dshade, Pro, 10bagger etc). My apologies if I omitted someone from that list.
1. Official PR. This will serve as the official announcement of the merger and that CLHI is the underlying ticker for The Data Source. Some will say that's just a formality, but my experience suggests that many wait for official confirmation before believing that it truly happened.
2. TA verification. Yes, we have informal verification, but seeing it on the OTC markets page is important for many.
3. Acquisition announcements and details. We know of two acquisitions in the hopper, but I don't believe they have been reflected in the share price to any meaningful degree.
4. Updated filings to get CLHI current. This will be important in removing any cautionary signs on the OTC Markets page, which is again important for many. In fact, many are precluded by their brokers from buying this stock due to the warning signs. That could lock additional demand.
5. New ticker. I don't view this as that important, but it has served as a short-term catalyst for some traders.
6. More details on TDS's assets and operations. I list this last not because it's not important, but because I believe chronologically it may be the last item we see as the others could hit rapidly and in succession. Releasing financial and other information on TDS could take some time as the company works through the SEC process.
Not an exhaustive list, but some of the things I'm looking forward to on the catalyst front.
Event risk taken off the table
Prior to this week, there was event risk priced into the stock as we didn't have a clear view on how the judge would rule. There was very strong conviction that things would work out, but still some uncertainty. That's been resolved and as a result, we have a higher floor on the stock.
There will be volatility due to the churning of the investor base that I mentioned and the thin float. Volatility works both ways. My advice is to figure out your internal price target, adjust based on new information as it comes out, and act appropriately. Try to pay less attention to intra-day swings as they could be violent (with an underlying upward trend). If you have the means, buy the dips to take advantage.
As far as I'm concerned, we have numerous POSITIVE information catalysts that are forthcoming. Looking forward to seeing what happens.
Word to the wise
Whenever someone boasts about their profits in other stocks, it's a red flag. They have seller's remorse or are very insecure. In this case, I believe it's the former, but it's really not worth pondering for too long. I would encourage all to let it go, ignore and move on. Their opinions won't matter given the opportunities ahead.
Today was a healthy day. We cleared out those that wanted to take a profit. There could also have been some catalyst traders that saw the resolution of the legal impediment and moved on to their next opportunity. Whatever their reasons, it's just part of the process.
Given the stock price appreciation, we needed to churn the investor base to bring in holders that will support the next leg higher. I think it's great that we finished well above the lows and within shouting distance of yesterday's close. Very bullish in my view.
You going to contact Ben afterwards?
Hey Pro, just curious if you were planning to contact Ben after he meets with the judge? Didn't want to pester him if you were going to reach out to him anyways.
Thanks, R17
Takeover value
When thinking about the valuation of TDS, keep in mind that the company has become a strategic takeover target to other players in the industry (Snowflake, Datadog, ZoomInfo etc.). They all have highly valued currencies (ie. share prices) that can be used to acquire smaller companies (ie. TDS) at some point. They also care more about the data assets, not historic revenues.
I raise this point as the takeover value will provide a certain floor to TDS' valuation. I'm not saying Stephenson is looking to sell anytime soon, just raising a factor that will determine its ultimate valuation (either on OTC or when it uplists).
Thanks for sharing
Great to see things are moving forward in an expeditious manner.