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Certainly not paying full price
He must think the underlying value is at least double that to warrant taking the risk. He probably has a glimpse into the company's plans that you and I don't yet and that gave him confidence to pay that price.
He also knows they intend to uplist and he helped them set a higher value for the shares to enable that process in my opinion.
I believe the trading price will converge at least at Bernard's price in fairly short order.
Your denominator is wrong
Simplest way to calculate the implied price is to take the post money value (ie. ~$67mm), subtract Bernard's $10mm investment and then you get the pre-money value (~$57mm). You divide the pre-money value of $57mm by the current shares outstanding (ie. ~13.3mm) and then you get the implied current value per share.
Bernard is receiving new shares in the company, so your denominator was too low.
Might see some buyers come in from..
X-Gen. Disappointing update from Synergy on that one as there's no dance partner yet.
We have a dance partner, they just need to make eye contact and take the lead.
I am
I took down about half the volume yesterday. Tough one to accumulate at this point. There will be some significant FOMO chasing as word spreads and news continues to be released, which I'm sure it will be leading up to the ticker change (and beyond).
Bernard effectively established the minimum price to uplist
He's buying in at ~$4.26 per share yet the market hasn't woken up yet. I'm sure he's not doing this to be charitable. He must believe that the underlying value will be at least double if not a lot more to justify this kind of investment. He couldn't acquire that much stock in the open market given the small float, so he had to do the private investment.
OTC traders will catch on at some point, especially the ones that can do some simple arithmetic.
He probably knows better what's going on
Than anyone else I know that's not directly involved with the company.
I laugh
It would have been better just to put out a PR stating the necessary steps. As long as it was broadly disseminated, even in the midst of an private capital raise, it should have been fine.
Not going to make any excuses for them.
Totally agree
No reason they couldn't put out a press release like Ameca did. At least outline the steps you're waiting on from OTC, SEC etc.
One can only hope that whatever is holding them back is so meaningful and beneficial that they had no choice. If it's simply a matter of waiting on the OTC, then they really have had no excuse.
We have some growing pains to deal with in terms of this becoming a public company. Hopefully once they officially go public, they'll handle communication much better.
My guess is they closed the capital raise
But that's just a guess on my part. Raising money and landing big sales deals are usually the two biggest reasons for an early stage company to celebrate like that.
Hope we find out for certain in the next couple of days.
Reason for optimism
Med-h is another reverse merger that was announced at roughly the same time as TDS/CLHI. They're finally getting their OTC updates. I know the circumstances aren't entirely similar, but Med-h's incoming CEO had been lamenting the time it's taken to get OTC to process his updates for some time.
I hesitate to suggest our update is coming soon, but anecdotal evidence might support that...fingers crossed.
Yield sign off by tomorrow
IR actually responded and said the Yield sign would be off by tomorrow.
Maybe they're getting the message that all is not well on the IR front.
Can a mod put up the PR from today?
Shocked that the stock isn't trading in the dollars already, but happy to take advantage.
Pre-money value
By my math, Bernard has set the pre-money value at ~$4.30 based on ~13.3mm shares outstanding. I get my value by subtracting $10mm from the post-money value (ie. $10mm/0.15) and dividing it by the aforementioned share count.
Bernard must believe the current value is at least double that to warrant an investment and take on the risk.
I notified IR
I assume they know, but they're somewhat arrogant so I didn't want to take a chance.
Need to get the audit done soon. That will help resolve a lot of issues.
Catalysts
-There should be many
A stock merely being cheap isn't typically enough to incite buyers, particularly on the OTC. We need catalysts to jump start interest and I think there are several that could play out:
1. More business wins for QCA and the construction businesses. With respect to the latter, Kent was very optimistic about Excel's prospects when I spoke to him recently. QCA stands to benefit as more tech manufacturing moves back to the US. Moreover, QCA is well-positioned in high-growth segments (drones, electric vehicles etc.). Unfortunately, due to contract provisions, Kent is limited in what he can discuss, but momentum in those areas should filter through to earnings results.
2. Acquisitions. I personally don't think the company needs another acquisition for a while, but it does appear that Kent has one targeted to close by year end. I hope it's a higher margin business or at least complementary to QCA.
3. Spectrum. Hadn't heard much on this business until the last presentation, but the rollout to all business units should be complete by early next year. Any indications on plans to commercialize this product to third-parties would be a significant catalyst in my opinion.
4. Earnings. I think this is the most important catalyst. Kent needs to drive operating margins much higher to further validate his model. The business model is partly predicated on buying businesses cheap (at less than 1x sales) and then getting a multiple step-up in the public markets. The multiple step-up depends on achieving operating margin improvement. There were undeniably some issues, partly due to Covid, earlier in the year, but I think we'll see improvement starting in Q3.
5. Buy American. We're going to hear a lot from both parties this election cycle about on-shoring manufacturing as a way to secure supply chains and boost the economy. It's rare to see bi-partisan support on anything these days, but this should be one area. Thematically, ALPP is in a good spot and it's up to Kent and the team to capitalize.
6. PPP loan conversion to equity. Either all or the majority of the $3.9mm should convert to equity (and get recognized as other income or a similar journal entry) in Q3. That will be a big boost to book equity and de-lever the balance sheet. Kent used part of the proceeds to pay down accounts payable and accrued expenses in Q2, which freed up working capital to support growth in the second half. The benefit of PPP was NOT appreciated by the markets, but that could change in the second half.
My summary thoughts.
Audit
CEO says he will produce audited financials soon. I think that will be a big catalyst.
A puzzling highly undervalued stock
Good SS and actually profitable on the operating income line that trades at 1x revenue with no debt. Seems like a prime candidate for a reverse merger to me as the value as a shell is probably 5x where it's trading at now.
Trades at a P/E of 1/2-1/3
That's not a typo. The stock trades at less than its earnings per share. It's not distressed with debt issues either. In fact, there's no debt and a healthy cash balance.
One of the more puzzling stocks you'll find in the market. Blame rests on Mr. Ballout for not improving the financial presentation and having a better IR effort, but this can be fixed. I'd encourage shareholders to express their dissatisfaction to IR and Mr. Ballout. Not sure you'll get a response, but the company might finally understand the issues at hand.
We're all frustrated
Rightfully so given the persistent twitter tease and lack of follow-through with substantive updates. I think management owes an apology at the very least, but we all want them to deliver with news.
I support your stance and hope they reconsider the block.
I'll continue to build a position
Not where you're at, but doing my part to soak up the seller here. Will pay off handsomely at some point.
Agreed
I don't condone the approach, but silly to sell here (even if your cost basis is in the pennies) with identifiable catalysts on the horizon and a severely depressed valuation.
Very reasonable
If the goal is to uplist in short order and now they have the share count at the level they want.
Just need some PR updates on what's going in the shell and we have the ticker change coming soon too.
Poor gamesmanship if that's the case
But it will be forgotten when they deliver positive updates.
Could be a way for Stephenson to let his hedge fund buddies accumulate cheap shares. Seen it before, will see it again.
What's the float post RS?
I think you posted it on Twitter, but I couldn't locate the tweet.
I've been buying, but it's thin and there's some big (relatively speaking) sellers out there dumping indiscriminately. Frustrating, but this seems like a 10-20x return if one can hold for as little as a few weeks.
Celebrating what is the question
Completion of the private placement, SEC filings, OTC requirements?
That is a good sign that something will be released, but punctuality hasn't been the company's forte to this point.
The day is young. We shall see.
That's what I saw on TD Ameritrade
Bid moved up into the close after the last tweet.
New tweet Hoke
Are we finally going to get the news!
And Synergy seemingly has only held stock..
In CLHI to own TDS. Says a lot too.
Haven't heard back from IR
I suspected they might not respond, particularly given their response to you.
Stock is too cheap and at least we have the catalyst of audited financials coming up. Perhaps Ballout will release some additional PRs on Wattoz and the other technology initiatives too.
If they respond similarly to me
I will have a stern response to the contrary on basically everything they said other than the need for audited financials.
Not sure who's giving them advice, but they really don't have a clue what they're talking about.
An 8:1 RS would reduce the share count to ~8mm shares. More importantly, the float would be reduced to below 2mm shares, which is much too low. No institutional investor could take a position and it wouldn't solve any issues related to the valuation.
Where or when did he say that?
I haven't heard that. Doesn't make any sense.
Sent some comments to IR this morning as well
The lack of trading volume after reporting earnings said a lot. The IR approach of this company is a total failure in addition to the aforementioned issues with the filing. I hope they heed our advice and fix some things.
With this float and share structure
The stock can move higher very quickly if Ballout gets a clue about IR and how to present the company properly. To this point, he's done everything wrong from an IR perspective.
I hope he takes your comments seriously and starts implementing some changes soon. It's mind boggling that the stock is trading at such a low level. He really should be embarrassed.
EPS
Ballout should show EPS too. That's a standard number presented in every SEC filer's financial reports.
I shake my head at his approach to certain basic things, but I'm hopeful that these simple things can be corrected.
You have a point
One that I've raised with Kent many times and recently in a one-on-one meeting at SNN. The operating profit needs to improve to support a much higher valuation. He needs to articulate a path to 8-12% EBITDA margins. I think Q3 will show a lot of improvement over Q2 as the impact from Covid will be less and some of the cost synergies from buying Excel and Deluxe will start showing up.
If you exclude the PPP "loan" of $3.9mm from total debt- it will be forgiven and turn into equity- capital leases represent ~40-45% of total debt. This is simply capitalized rent and was incurred as acquisition financing. It is very low cost and non-recourse. Still means it is a fixed obligation, but it's not as onerous as bank debt or other obligations. It will remain a fixed part of the capital structure as long as the company is operating, and that's a good thing in my opinion as it's a low cost source of capital.
My understanding is that Kent will be meeting with more investors in September including ones in NY. August is a dead month for most institutional investors and this year is even more so given Covid.
The stock started trading much better in the Fall last year and hopefully that seasonal trading pattern repeats itself.
I saw them
The formatting in general was unprofessional and not anything close to what an SEC filer would provide. I've mentioned this to the company. I hope they are more receptive to your comments.
Ballout needs to hire a Chief Accounting Officer at the very least. Some basic steps to improve their filings and disclosures would really help the stock.
Stock should be trading at $1.50-$2 given the EPS even assuming no growth for the core solar business. That also assumes no value for Wattoz and other technology initiatives he's mentioned. If Ballout is going to uplist, the quality of presentation and IR needs to improve markedly soon.
What was the deal with the 100k ask popping up at $0.14 and then dropping?
Any thoughts?
On the bright side
There shouldn't be any overhead resistance once news hits and certain things become official. One of the advantages of taking a stair case type approach higher.
Social media fatigue
Buyers to drive the next leg up need to see PRs and filings IMO. Hope I'm wrong and we get the information we're seeking by the end of the week.
Curious if there's a decentralized finance angle here
I do a lot of work in the blockchain space and decentralized finance, or defi, is one of the big areas of growth. One of the critical components for defi applications are trusted data feeds from "oracles" to ensure fair pricing for transactions. I could envision Orion FX providing price information that TDS relays to various blockchain applications that need such data.
I mention the blockchain angle because TDS has referred to blockchain being an important component of their business plan in various tweets.
Pure speculation on my part, but some interesting possibilities.