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Good call on Snowflake being an important catalyst Hoke
You were vocal about this and it seems to be playing out, despite our management team doing absolutely nothing to stoke the fire. At least when they say something substantive, we should have another important catalyst.
From a valuation perspective, it's not a contest
Much better investment than Snowflake. The valuation is still trivial in relation to the upside potential.
AI
Let's not forget, when I did my valuation discussion based on the private offering, the AI technology wasn't part of the discussion. If large companies are interested in using the technology, it must have meaningful value that can only be additive to the prior valuation.
Fundamentally, they're in a sweet spot
Unfortunately, the communication has been bungled to this point, but it's early in the company's lifecycle. We'll be fine. Enormous upside potential.
The accumulation last week was a great sign. Volume precedes price as they say. Stephenson just needs to step up now.
The valuation should already be well north of here
IMO, it's being suppressed to allow for institutional accumulation, most likely by UK investment funds (but perhaps some in the US too). That said, any quiet period associated with the capital raise should be over this week so the regulatory obstacles should be eliminated.
I've hesitated to put an upside price target as there's a lot of information yet to be ascertained. That said, the current valuation of CLHI is grossly undervalued under a wide range of scenarios.
Controlled accumulation by institutions
Trying to be disciplined in their accumulation of the stock and take advantage of retail. Seems very apparent to me.
Next week will mark a month since the rooftop celebration. Not sure if that marks the end of whatever quiet period they're observing, but let's hope so.
My awesome feeling will come
When the stock is trading at market cap of several hundred million. No awesome feeling for me yet.
Impossible to answer with any degree of certainty
As far as the price move, I have no clue. As with most OTC companies, it probably depends on news flow. If we start getting some news on incremental business wins and new contracts, that will help. It's been slow on that front this year (ironically, Q2 was the best quarter on that front due to Covid related business).
Q3 earnings won't be released until mid November, but that could help too. Keep in mind, they should be able to treat the PPP loan as a grant at that point. This means the loan gets converted to equity and there should be a large booking of other income in Q3, which should mean positive net income and EPS in that quarter.
With respect to acquisitions, it's impossible to assess the impact. We don't know what type of businesses they're looking at. I would say, if the gross margins are better than the current corporate average, that will be viewed positively.
For me, it's all about gross margins at this point. I'd like to see the gross profit dollars on an upward trajectory. The share price will take care of itself after that.
To be clear
The float is not 280mm, it's the shares outstanding. The trading float is 2.5-3mm after the RS of the shares of MISMD pre-merger. The shares outstanding will be 320mm after Bernard's investment.
Good advice
I would add that if you're averaging down, make sure that the company doesn't have variable convertible debt (VCD) so the dilution doesn't overpower your efforts. At the very least, make sure that there's an endpoint to the dilution and management is trying to stop it by renegotiating or paying it down.
I think the issue with ALPP is that Kent needs to focus more on operating profit and less on selling his inorganic growth story. He also needs to focus more on Spectrum.
Does it matter?
The shares are likely restricted for a certain period, but they still matter in terms of the valuation. The float is still small, which helps magnify positive news, but the SS isn't as great as most of us assumed.
Management needs to retire shares and get the share count lower. They're delusional if they think they can uplist with this SS even assuming they acquire all of the companies in their pipeline.
I'm holding a small fraction of my original shares after dumping most immediately after the presentation. I don't see much if any downside from here, but the upside is hard for me to assess.
Might get a technical bounce given the carnage after the presentation.
Mgmt said it during the LD Micro presentation
Pro forma for Bernard, it's actually ~320mm shares. The company needs to retire some shares to get the share structure down to a level where uplisting is possible. Not sure what they are thinking.
That said, Bernard is investing at ~$0.20/share so there shouldn't be much downside at the current price.
Blame management
Nobody got anything wrong based on information provided. Management wasn't forthcoming in the RS press release and should have been. They RS the shares owned by MISMD shareholders and left the others intact.
That said, Bernard is buying in at $0.20 and he must think the shares are at least worth double that based on the first couple of acquisitions. Not much downside, but hard to assess the upside.
I don't see how they can uplist with the current share structure, but I guess we'll have to wait to find out.
Life in the OTC...good management teams are at a premium.
Did you listen?
If not, listen to the Q&A portion. You'll find your answer as far as the reason behind the sell-off. Blame management, not shorters.
That said, probably not a lot of downside from here given Bernard got in at $0.20 based on the share count management provided. As far as upside? Trying to assess based on the revenue guidance they gave and some assumptions regarding incremental share issuance to buy more companies.
No doubt
We're moving forward, just at a snail's pace.
Yeah, they rushed that out
There were typos and it seemed like they were trying to get the Twitterverse off their backs for a bit. Not sure the point of it and why that's acceptable versus a PR.
Chalk it up to growing pains.
UK regulations
I don't know them, but it's conceivable they have to wait until 30 days after closing to talk publicly about it and perhaps do a detailed PR. I can only assume that the rooftop party coincided with the closing of the offering.
The offering they did, while "private", actually involved a public solicitation through their website. It was somewhat limited as investors had to self-certify that they were aware of and could bear the risk of the investment, but it was fairly open to anyone that accepted the conditions.
If I'm right, we might be waiting for the quiet period to elapse before a more substantive update. Certainly hope I'm wrong in my assessment, but that's my guess at this point.
What I don't understand is why they kept harping that updates were coming in early August and then backed off. I can only surmise that the new CFO or someone else told them to stop and wait so as not to incite a regulatory response.
Progressing rapidly
Obviously have a detailed plan in place to grow the business both financially and operationally. I have many questions that I hope to ask during the LD presentation today.
New CFO
I'm wondering if the new CFO has been the driving force in reducing information flow in the past couple of weeks. It's possible in an effort to increase the level of "professionalism" at the company, he told Stephenson and others that the social media posts need to be curtailed. Just a thought.
I'm not excusing the lack of formal communication re:CLHI in any way. I think they should have put out a press release similar to Ameca and that would have been satisfactory and perfectly acceptable to all sides (company, investors and regulators).
It's also possible that they are waiting until after Labor Day to release substantive information. This gives UK funds and others they know a chance to accumulate this week.
Looking forward to a time when we can all debate business issues and valuation (at a much higher level of course) versus speculating on news flow.
Current OS isn't the issue
It's the stock price and implied market cap. They have to increase, which comes with telling a good story to get the multiple up and completing some deals like Pioneer Global to lay the foundation.
That said, there's many options that don't require much creativity or immediate dilution, just standard corporate finance. For example, they can issue convertible preferred with an earnout option to the target.
Anyways, not much point debating this further. We'll find out more tomorrow and perhaps your skepticism of my view will change.
Can issue stock too
Wasn't suggesting that was their entire firepower to do deals (just the cash portion). That said, I doubt they want to issue stock until the price is much higher.
There's a sequence of events that should take place where they do a deal or two to jump start the stock price and then use stock as currency.
Keep in mind
The types of businesses they're looking at (HCM, IT services) usually throw off good cash flow and have low capital expenditure requirements. That translates into good free cash flow, which can be used to service debt. Consequently, they have probably 4-5x Bernard's investment as "firepower" to do deals if my assessment of their targets is correct.
Should be an interesting month.
It's possible
They're raising the $10mm from Bernard to do something and likely need a good sized acquisition to propel them to uplisting.
I did see that article
Obviously there's a lot of potential targets for Futuris to go after within their own "network". I hope they give us some idea tomorrow. I suspect they want to achieve a much higher valuation to enable the acquisition process (and rapid uplist) and Bernard's investment was a catalyst. Amazing that the stock isn't already at $3-$4, but I think a parabolic move could be in the offing.
Presentation tomorrow morning at LD Micro
That should help a lot IMO. It's impressive that they were able to get a presentation slot after just completing the RM.
10:40am Eastern time on Thursday. Track 4.
https://ld500.ldmicro.com/
Not sure if you noticed
But Ballout filed an amended 10-Q with better formatting. The columns actually are straight!
It's clear he's kind of an arrogant guy that doesn't like to admit when he's wrong. They've been fairly combative with me in email exchanges (they meaning IR, but I have to believe the words are coming from him).
Stock is trading at a PE of 0.2x based on last quarter's net income annualized. Last quarter, they did $0.08 in EPS.
I think audited financials are key here, but cleaning up the OTC markets page and putting out some financial PRs (like earnings releases) would certainly help.
He said the problem was that there were converts holding down the stock. That is laughable. The issue is lack of sustained buying pressure, which he can help facilitate.
Growing pains
I understand your point of view. I think the company is going through some growing pains and learning how to communicate as a public company. They obviously weren't ready for the type of scrutiny even OTC investors were going to provide. This will ultimately benefit them. I would argue it already has benefited them since they've refrained from setting "deadlines" on Twitter that they couldn't meet with certainty.
I look at the public comps, not just ZoomInfo, but other ad and ecommerce companies like TradeDesk, and see enormous potential for the company's valuation. It's taking longer than I would have thought for the first stage to play out, but the ultimate payoff hasn't changed (actually has increased given the broader markets).
The trading is certainly indicative of professional accumulation. It's highly likely that some funds in the UK that looked at the private deal are trying to accumulate CLHI as well. The float is thin, which can lead to discontinuous jumps like yesterday.
At this point, we just wait I guess.
When are we getting a...
PA-$O type valuation Hoke?
Would help if management would utter something...show a pulse.
The prolonged silence after the flurry of tweets earlier in the summer would suggest that something is brewing, but I've thought that for a few weeks and been wrong.
ALPP presented at 2:20pm Eastern today
https://ld-micro-conference.events.issuerdirect.com/agenda?track_id=11469
Fair points
I don't view the debt burden as being a concern, but he could explain that better. 40-45% of it is due to capitalized lease obligations. He could address that in a direct fashion and allay any concerns. He uses sale-leasebacks of fixed assets (ie. production facilities) to pay for the acquired company in many cases.
I would like him to discuss margin potential and have mentioned that to him repeatedly. I think he's under the impression that investors will only gravitate to a revenue growth story, but I think he's mistaken in that regard.
I think his view on valuation is certainly reasonable, but we need a catalyst.
LD Micro Presentation- Kent says company should be valued at $55-$60 million (ie. $0.50-$0.55/share)
My thoughts:
1. Kent talked a lot more about Spectrum as a growth driver than he has in the past. No real specifics about a rollout to third parties from what I heard, but it's a step in the right direction.
2. For the first time, Kent actually gave some specific thoughts on his estimate of the value of the company. In his view, he thinks the valuation should be ~$55-$60mm. It's obviously an opinion, but I've never heard him give an estimate of overall market value for the company.
3. The majority of the presentation was similar to ones given a few weeks ago. No changes to revenue guidance of $9mm for Q3 and $10.5mm.
4. Talked about at least 1 and maybe 2 acquisitions closing by year end. No specifics on the types of businesses he's looking at, but I hope they carry higher gross margins than the current corporate average.
Presentation next week
I suspect we'll learn a lot more about the direction of the company next week. The current price is absurdly low in relation to the price implied by Bernard's stake.
FOMO chasing probably begins in earnest early next week.
Real problem
Is too many negative posts on iHub Hoke. It has nothing to do with radio silence from management:)
The entire approach to IR is bizarre, but I understand there are special circumstances. Hope we find out something more substantive next week, but timing doesn't change the endgame IMO. Just the path.
Good to know
Means they're preparing to scale rapidly and perhaps uplist in a short time frame. Probably will help a lot in terms of getting filings up to date as soon as possible too.
Pieces are there for a high valuation
Up to Stephenson to articulate the story properly and generate investor excitement. Time for the long awaited PR
Curious what you think of the CFO
Good sign to bring one on board at this juncture. Oftentimes, companies at this stage hold off on a CFO and outsource the function. Stephenson seems to be laying a good foundation for growth and perhaps a quicker than expected uplist?
Hope we learn a lot more the remainder of this week.
OTC investors not connecting the dots yet Hoke
Mr. Stephenson needs to release the long awaited PR and open the curtain to show off the company and its potential.
I saw Robert Stephenson as a director of the company
On the OTC website. Is that what you're referring to?
Guess he put a clamp down on social media
Because there's been no Tweets in four days. That's a good thing as it's better to "surprise" the markets with a substantive update at this point.
Not sure what "book" he's reading from (perhaps it's a UK regulator issue), but it didn't stop Ameca from putting out a perfectly fine PR outlining its process. I fail to see why Stephenson couldn't have done the same thing. I know he had a private funding round to close, but it certainly seems that closed a while ago based on changes to the website. Moreover, they've been alluding to updates for some time, so it's hard to believe that closing the offering was what was holding back updates.
They have said that "all will be explained at a later date" in a prior tweet. I hope that later date comes soon.
To the poster that suggested I'm being too negative (not you Pro-Life), nothing could be further from the truth. I own a lot of stock and only want the company and stock price to succeed. That said, I think holding the company accountable is important. Moreover, I highly doubt, as this poster suggested, that posts here are responsible for the majority of the trading activity. This stock has been held down so some entities can accumulate. There's multiple reasons to believe that, which I won't go into now.
Thanks for sharing your exchange with Stephenson PL. Much appreciated. I can only hope that once the curtain is pulled, he has a better approach to IR, explaining the TDS story and achieving a strong market cap.
Took a look
There's obviously a lot of companies under management's control that could be merged into this entity. They also seem to have some acquisitions lined up to take advantage of Bernard's capital.
I think we'll learn a lot more leading up to the LD Micro presentation.
Like I said previously, I expect the stock to converge on Bernard's implied purchase price in short order. I think we had some residual sellers after the RS, but that's over now. They have the share structure setup at the level they want and now it's time to increase the share price to better reflect the opportunity.