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POLA surging again today on strong volume following another conference presentation, a positive SA article and a form of positive revenue guidance described in my prior post below. Also, there's still almost 200,000 shares still short who should be feeling pressure to unwind. Don't think earnings will impress in the near term, but another big sequential jump in quarterly revenue could drive this higher when Q1 is reported (which last year was end of April).
The news of the SA article explains yesterday's good volume and action. We'll see if the broader release today has an additional ripple effect.
Busting a move today on good volume. Finally in the green on this one after much averaging down.
My understanding is that when there's a change of control tax losses don't follow.If the shell is sold "empty" the new owner would not get tax losses. And a third party would only contribute significant new assets to the shell if issued a controlling stake which would also eliminate tax losses.
POLA For those of you who don't follow the POLA board, below is the link to their presentation for March 12 Roth Conference:
https://s21.q4cdn.com/772584186/files/doc_presentations/2018/Polar-Power-Investor-Presentation-March-2018-Final-Roth-PRINTED.pdf
Note in particular the language on page 10:
"Reached a three-year commercial agreement with U.S. Tier-1 wireless carrier customer [This is ATT]
Q4-2017 –This customer generated 45% of net sales and in Q1-2018 = 3X Q4-2017 run rate"
45% of Q4 net sales is $1.8 million and 3X $1.8 is $5.4 million in Q1 net sales just from ATT alone. If so, and you assume the rest of their business stays at a flat $2.2 million in Q1 (same as Q4) then Q1 net sales would total $7.6 million vs. $4 million in Q4.
Recognizing that the term "run rate" is a little squishy, it still looks like POLA is set to announce a big increase in Q1 revenues. Last year they announced Q1 at the end of April.
"Reached a three-year commercial agreement with U.S. Tier-1 wireless carrier customer
Q4-2017 –This customer generated 45% of net sales and in Q1-2018 = 3X Q4-2017 run rate"
45% of Q4 net sales is $1.8 million and 3X $1.8 is $5.4 million in Q1 net sales just from ATT alone. If so, and you assume the rest of their business stays at a flat $2.2 million in Q1 (same as Q4) then Q1 net sales would total $7.6 million.
Am I reading language and doing math correctly?
NAP Bought a shipload at 4.16 average which is 12% yield based on new annual dividend rate of .50. Since they just lowered I'm hoping the stock bounces in the coming weeks or at least the dividend is now sustainable.
POLA--Showing some volume and price momentum recently. Just because they fumbled their revenue ramp doesn't mean they'll never get it together. Q4 was first sequential increase in revenues in several quarters. Last year Q1 was reported at the end of April. Recent bullish volume suggests Q1 revenues will again be sequentially higher. After establishing a pattern of sequential revenue growth, they'll also have to show good margins can generate good earnings.
GE Even further down to new recent lows on an up market day. Guessing many money managers want it off the books at any price by end of March. Could be a good end of Friday trade for a Monday bounce.
PERI Started a position at .785. Even with modest guidance for 2018, seems like a company worth more than $60 million especially with a turnaround CEO minding the store. Never know where the bottom is but hoping we're close.
NAP Cuts dividend and stock gets creamed. I have a little in one of my kid's accounts.
AMS IMO that was another "nothing burger" quarter with no real positive outlook. I would guess management is going to get it on the conference call. They should.
AMS Showing life on a wretched market day. Wonder if it means anything.
ISIG AIRT must have bought mine. I had decent gain on small position so took it given recent market volatility which usually doesn't favor microcaps.
You sound like disgruntled ex employee.
Good volume today and some bullish bidding. Since Q4 revenues were sequentially higher for the first time in a few Q's some may be starting to believe they're getting traction after some wheel spinning.
Bought more today at $4.63 as just have to believe they're building a business worth much more than their $50 million market cap. Last year they PR'd Q1 results on 4/28 so we should be seeing their Q1 results in about 6 weeks.
I'm trying to understand the predictive value of their backlog. An end of Q3 backlog of $1.5 million resulted in $4 million in Q4 or 2.67x backlog at beginning of Q. Backlog was $1.8 million at the end of Q4 which would translate to $4.8 million of Q1 revenue using same multiplier.
While I don't believe a single data point is statistically predictive, I'm wondering more generally whether their timeline from order to shipment is so short that their quarterly revenue consistently will be multiples of their quarter beginning backlog, and their reported backlogs will only reflect a few weeks of revenues.
I bought more today. I just hope they can ramp revenues and get the share price up before there's a serious market correction. I feel they'll eventually pull the pieces together but hope we're not in a bear market that won't reward their ramp up.
I think the trickiest thing about POLA is trying to triangulate earnings given their growing R&D for expanded product offerings and customer customization, industry price compression pressures and the cost structure of their global sales footprint.
If Q1 sales are accelerating not sure why the backlog is only $1.8 million.
Given a very precise $4 million of Q4 revenues, I'm guessing they begged, pleaded and discounted with their active customers to get to it.
POLA Never mind. They laid another egg.
POLA reports after the close. Pick up a few now or at least be ready to acquire after hours!
PCMI Out at 11.35.
PCMI My average cost is 9.30 after repeatedly averaging down and building such a big position I just had to stop. Never imagine it would trade down into the 6's.
APWC I have owned for a looooong time. Keep in mind that APWC is 75% owned by its parent, PEWC in Taiwan, which originally set up APWC to be its "rest of Asia" subsidiary. PEWC would never consider losing control of this subsidiary so won't accept the offer. However, this might pressure PEWC to take out the minority shareholders for at least $4 per share. IMHO the most likely outcome is that nothing will happen consistent with management's "do nothing" history. I'm not aware of any credible legal cause of action that could force PEWC to do anything, so you might want to consider a quick flip here.
PCMI $5.95 in premarket?! Hopefully just a stray trade.
I'll guess Q4 revenues of $6.5 million and a higher backlog. ?? Go big or go home!
AAOI -Seemed like a situation where the shorts didn't have any special inside information but just good insight into the competitive pressures in the industry segment. Different segment, but let's hope it's not the same good insight prompting the PCMI selloff.
I was thinking the full payout could take a long time with the escrow etc. Presumably the first payout would come shortly after the deal closes. Unclear how large the first payout would be but hopefully at least .006 per share? That could be just a few months away and would drive the share price up. Depending on how high the share price ran, it may be tempting to sell even before the first distribution is even made and lock in a nice profit compared to current share price.
I just realized we don't necessarily have to hang in for 1-2 years to realize a profit here. The stock has to pop substantially when the deal closes in Q2. That will be an opportunity to walk away with a nice gain.
Valuation particulars aside, the CBAI assets were shopped for over a year and Red Oak's interest in getting the best deal is aligned with other SHs. They got the best price they could get in an open market process which is the best indication of true value. There's no evidence and I don't believe Red Oak was conflicted in the sale to FamilyCord, so how can you reasonably conclude that the assets are worth 50+% more?!
Doesn't make sense to me that CCEL would oppose the sale or continue to compete for the assets. The had a chance to outbid FamilyCord and chose not to. They can do math just like the rest of us and see an opportunity to double their money at a price below .005. I think it's highly likely they vote in favor of the transaction along with anybody else who bought shares since the asset sale was announced.
Quickly reviewed 8K and Purchase Agreement. $3 million of $15.5 will go into escrow account to protect buyer against non-assumed potential liabilities. As the seller reps underwriting certain potential liabilities last for two years, I'm guessing any remaining escrow amount would be released then. Couldn't find copy of escrow agreement in filing.
Still think it's trading way too cheaply but down market day isn't helping
POLA busting a move. Maybe sellers have exhausted themselves. Looking ahead to Q4 announcement, it will be interesting to see what the market defines as sufficient levels of revenues and backlog to drive the stock up. There was confusion on the last conference call about how Q4 revenues were tracking YOY where they first made a very bullish prediction in response to a question and then seemed to back off of it.
I guess a clean shell isn't as valuable as I was thinking
I was thinking about the international deals. Maybe after a grace period they can get somebody to assume the shell and any liabilities. Then they could distribute all the cash.
Another valuable asset is a shell publicly listed company once sale proceeds are distributed. Somebody looking to do a reverse merger instead of IPO will pay up for a shell.
Unless they've done so already or FamilyCord was excluded, they'll have to pay the investment bank in Richmond they hired to shop the assets probably in the range of 1%-3% of sales price.
The biggest question will be how long they hold on to a significant amount of the proceeds as a reserve against possible future third party claims against the company. Before Red Oak so many sketchy deals were done with sketchy parties, who knows who will surface when the company's flush with cash.
One thing that could cut into SH distributions would be the cost of defending lawsuits by plaintiff lawyers who seem to file suit for every corporate transaction. It seems like they would have a terrible case here so long as Red Oak doesn't try to divert any sales proceeds (like charging a hefty "advisory fee").
There would be capital gains tax on the portion of the sales price that exceeds the basis or cost of the assets. No idea what their cost basis in the specimens would be. Seems like it would be at 20% rate but not sure about that.