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Here is something I missed from March 9. It was water treatment that originally made me look into this company.
Clean TeQ progresses HiROx® water treatment plant
proposal with Townsville City Council
MELBOURNE, Australia – Sam Riggall, Chief Executive Officer of Clean TeQ Holdings
Limited (Clean TeQ or Company) (ASX/TSX:CLQ; OTCQX:CTEQF), announces that strong
progress is being made towards Clean TeQ securing an engineering, procurement and
construction (EPC) contract with Townsville City Council for a large-scale water recycling
plant utilizing our HiROx® process and BioLense encapsulated bacteria. HiROx® is an ultrahigh recovery water treatment process which combines Clean TeQ’s continuous ion
exchange (CIF) technology with reverse osmosis.
Clean TeQ Water has been advised that it is the preferred contractor to deliver a recycled
water re-use plant at the Cleveland Bay Purification Plant in Townsville, however, final award
of an EPC contract is subject to a range of conditions including agreement on commercial
terms, construction schedule and pricing. While the EPC contract discussions are ongoing,
and in order to maintain the targeted delivery schedule, Townsville has engaged Clean TeQ
on an initial scope of work valued at A$920,000 for detailed design and procurement of longlead items for the plant. This work is now underway.
Clean TeQ will further update the market once there is additional information regarding the
final EPC contract.
https://clients3.weblink.com.au/pdf/CLQ/02211706.pdf
That's what an active message board looks like. So it turns out that I'm not the only one who thinks 10 cents per share for MGX Renewables is not a good deal.
This sounds like maybe good news for MGX Renewables, but not for MGX Minerals. "Also as part of the settlement, MGX Minerals Inc. has agreed to sell to Zimtu Capital Corp. 5,500,000 shares of Zinc8 for $550,000... ." That is 10 cents a share (Canadian I assume), which is way below the recent price.
At some point this will triple, I'm just not sure if it will be from 9 cents to 27 cents, or 1 cent to three cents.
I just stumbled across this article on blockchain put out by Schwab. It describes in favorable terms something pretty much exactly like what tZERO is offering. Who knows, maybe the major brokerages might actually get on board. Unfortunately there is no date on the article.
https://www.schwab.com/active-trader/insights/content/what-is-blockchain-and-how-will-it-affect-future-trading
What Is Blockchain and How Will it Affect the Future of Trading?
By Lee Bohl
These days it seems like you can’t pick up a financial publication, go to a party or hang out at the water cooler without seeing or hearing something about blockchain. So what is blockchain, and how might it impact the future of trading?
In simple terms, a blockchain is a shared, distributed, and immutable ledger that facilitates the process of recording transactions and tracking assets. The assets can be tangible, such as automobile parts, or intangible, such as intellectual property like patents or the so called cryptocurrencies like Bitcoin and Ether. It is important to keep in mind that cryptocurrencies are not the same as blockchain. As an analogy, think of blockchain as a type of operating system, like Linux or Unix, that can run various applications. Bitcoin is just one of many applications that use the blockchain framework.
The word ‘blockchain” comes from the way the system stores data. Transactions are stored as “blocks” that are linked together to form a “chain;” the more transactions that are recorded, the longer the chain. Each block contains a “hash,” a time-stamped transaction entry, as well as the hash from the previous block. The hash from the previous block prevents blocks from being altered and transactions from being inserted between two existing blocks. If a transaction is entered in error, a new transaction must be used to reverse the error, and both transactions are then visible.
There are several different categories of blockchain, defined by the participants who use them. The first type is called Public and permissionless: All transactions are public and no permissions are required to join them. Bitcoin is an example. The second type is private and permissioned. As the name suggests, access to the blockchain is limited to designated members. The third type is a hybrid of the previous two and is based on a relatively new concept called a “sidechain” which allows different, public or private blockchains to communicate with each other.
Blockchain technology could impact the future of trading in several ways. Today, many trades go through a settlement process that spans days, due in part to the role of intermediaries, like exchanges and clearinghouses, and regulatory processes. If trades were recorded on a blockchain network, settlement times could drop from days to minutes, improving efficiencies and reducing errors. Because the blockchain would be transparent to all parties, the need for time-consuming reconciliations and audits would be dramatically reduced, potentially lowering the cost of doing business. These savings could be passed on to traders in the form of lower commissions and fees.
Blockchain technology is also facilitating trading in new digital assets. One recent example is RMG®. RMG®, which stands for Royal Mint Gold, is a new cost effective and secure way to hold, transact, and trade physical gold using blockchain technology. RMG® was created by a partnership between the Royal Mint, a company owned by the British government, and CME group, one of the world’s largest derivative marketplaces. RMG® has no storage or management fees to erode the gold’s value, and operates in a transparent market with investors having the ability to trade RMG® with real-time pricing (on a dedicated Digital Asset Trading Platform).
Finally, many commentators are drawing parallels between the emergence of blockchain technology and the emergence of the internet in the late 1990’s. Companies that can figure out how to profitably harness the immense power of blockchain could be the stock market winners of the future.
My guess is that if you have an account with a broker that is on the tZERO system then your dividend shares will make their way into that account. If you don't then your shares will be held in your name by Overstock/tZERO. In the latter case you won't be able to sell your shares until you move them into a brokerage account. The more I think about it, I see that the end goal isn't to get millions of people to sign up with Dinosaur, but rather to get the existing brokerages to sign on to the tZERO exchange. I'm not sure what incentive these brokerages have to do this.
I called up Schwab and asked what their take on the situation is. Last summer they called in all of the shares lent out to short sellers because they did not know how to deal with the dividend, so I thought maybe they were going through a similar situation now. Basically I was told that they are awaiting specific guidance from Overstock as to how it is going to work. I couldn't tell if the guy was holding back anything, though he did keep saying things like "that's all that's public right now."
Regardless of what % of MGX Renewables MGX Minerals owns, 13,540,629 shares times US$0.33/share (most recent price at this moment) is US$4.46m. The market cap of MGXMF at this moment is US$11.6m. So this is something to keep an eye on, but there isn't anything out of wack here.
Do you know if any of this is included in that 77 million number?
https://zinc8energy.com/investors/press-releases/2020/47-zinc8-energy-solutions-announces-closing-of-private-placement
Zinc8 Energy Solutions Announces Closing of Private Placement
VANCOUVER, BC / February 10, 2020 / MGX Renewables Inc., DBA Zinc8 Energy Solutions (the "Company") (CSE:MGXR )(FSE:0E9) (OTCPINK:MGXRF) is pleased to announce that it has completed its previously announced non-brokered private placement (the "Private Placement"), as described in its News Release dated January 21, 2020, pursuant to which it has issued an aggregate of 27,879,513 units (each, a "Unit") at a price of $0.11 per Unit for gross proceeds of $3,066,746.43.
Each Unit consists of one (1) common share and one non-transferable share purchase warrant (each a "Warrant"). The Warrants are exercisable for a period of two (2) years at a price of $0.155 in the first year from the date of issuance and at a price of $0.40 for the balance of the term.
The Company paid finder's fees of $186,893 and issued 632,887 share purchase warrants to certain finders in connection with the Private Placement.
All securities issued in respect of the Private Placement will be subject to a hold period of four (4) months and a day from closing of the Private Placement in accordance with securities laws.
The proceeds of the Private Placement will be used for general working capital.
I was recalling that at the time of the spinoff MGX Minerals retained 60% ownership (I think I have that number right) of MGX Renewables. With the price of MGX Renewables taking off and MGX Minerals staying low, it might be smart to buy the latter just for the stake in the former. I sent an email to MGXM asking what part of MGXR they own, but haven't received a response. Doing some searching I see that MGXR made an apparently highly dilutive cash raise recently. So anyway, does anyone have an up to date number for MGXM's stake in MGXR?
The run up would be due to short sellers covering? I don't think there is as much out there sold short as there was in the summer. Meanwhile, I think there might be some who want to get out before the distribution because it is a needless hassle.
BlackRock Trashes Overstocks Cryptocurrency Dividend -- Market Talk
2:22 PM ET 2/14/20 | Dow Jones
1422 ET - Investment giant BlackRock criticized online retailer Overstock.com's decision to declare a shareholder dividend in cryptocurrency tied to the e-commerce company's own blockchain exchange. BlackRock's Feb. 14 public rebuke came a day after Overstock said shareholders voted to let the company move forward with the digital dividend. BlackRock's stewardship team voted against it. The money manager said Overstock didn't address concerns around how the digital security would be traded, priced and custodied. BlackRock is the world's largest investment manager with $7.4T in assets under management. "Based on our analysis and multiple engagements with the company, we believe the board and management team prematurely declared this dividend and did not fully vet the trading process." BlackRock said. Overstock received a subpoena in 2019 from the SEC related to the proposed dividend, the WSJ previously reported. (dawn.lim@wsj.com)
Hecla Announces Pricing of Senior Notes Offering
https://seekingalpha.com/pr/17779531-hecla-announces-pricing-of-senior-notes-offering
"The Notes will pay interest semi-annually in arrears at a rate of 7.250% per year and will mature on February 15, 2028, unless earlier redeemed or repurchased. The Notes will be fully and unconditionally guaranteed by certain of the Company’s subsidiaries. The Company intends to use the net proceeds from the Offering, together with cash on hand, to redeem all of its outstanding 6.875% Senior Notes due 2021 (the “2021 Notes”) and to pay fees and expenses in connection with the Offering and the redemption of the 2021 Notes."
Why would you pay off the existing notes early in order to lock in a higher interest rate?
Is anyone else following this?
Here's a recent interview with the CEO:
For institutional ownership:
Schwab has a "--" indicating unknown I guess.
Etrade says 53.31%
Correction to my previous post: there was a sale of 100k shares at 0.005. The sale at 0.01 was for 10k shares. Note also a sale of 100k shares at 0.0001, so I'm not sure what to think of all this. The bid/ask at this moment is 0.0017 / 0.02. Earlier today I saw an ask of 0.03.
10:25:22 0.01 10000 OTO
09:40:23 0.005 49334 OTO
09:40:23 0.0045 50000 OTO
09:40:23 0.0001 99334 OTO
09:40:11 0.0001 666 OTO
Yeah, that is weird. I chalk this up to web developer fail. What is particularly bad is that when you put "mgx minerals" into google or duckduckgo, the first company website that you get is that one. (It is also bad that you have to go 3 pages deep in the google search results before they will even give you an actual company website, but that is another matter.)
Reposting in case anyone didn't notice it before:
<<
Here is a link to a slightly more active board for Aladdin Separation Technologies:
https://investorshub.advfn.com/Haber-Science-Inc(fka-HABE)-989/
>>
This board (the one we are on now) has been more active of late though. It's nice that it uses the current symbol, but the information about the company seems to be left over from some other company that had the symbol ASPT in the past.
Anyway, more purchases today, including 100K shares at 0.01. It makes me wish I had tried harder to accumulate at 0.0001, or whatever it was in the past.
Not sure what you mean by "Canadian website address." We all have access to the same info, and if you put in http://mgxminerals.com you are sent to the same place. I don't think that the "ca" has any significance - it is just a matter of how the web developers organized things.
What good do you see coming out of the meeting?
Are talking about specific situations here, or just the reputation?
In case you didn't notice, there has been some activity on the ASPT board.
https://investorshub.advfn.com/Aladdin-Separation-Technologies-Inc-ASPT-1295/
I'll repeat here what I said there, which is that I was actually able to make a sell at 0.005, which would have been up over 1000% at the time. Basically, I saw that there was a bid posted at that level and I wondered if it was real, so I offered up some shares I had in an IRA that I wanted to clear out anyway. The transaction took maybe ten minutes to execute I think.
Here are time and sales for the last few months. A couple of the January buys were me screwing around. I put in a limit order at 0.0004 for 100k shares and got the usual micro-fills. Etrade is still charging commissions for these sorts of trades, so I cancelled it after two trades.
10:26:02 0.005 7233 OTO --- this is my sell
10:26:02 0.005 3333 OTO
01/28 0.0003 15116 OTO
01/28 0.01 10000 OTO
01/24 0.0003 20000 OTO
01/24 0.0003 3333 OTO
01/22 0.0003 2833 OTO
01/13 i 0.0003 78 OTO
01/13 0.0004 1400 OTO --- this is my buy
01/09 0.0004 1666 OTO --- my buy
12/30 0.0004 10633 OTO
12/30 0.0004 3333 OTO
12/18 0.0004 1666 OTO
12/12 0.0004 3333 OTO
11/29 0.0004 10000 OTO
11/20 0.0003 366 OTO
11/18 0.0004 135 OTO
11/18 0.0004 350 OTO
11/18 0.0004 500 OTO
11/13 0.0003 2167 OTO
11/12 0.0004 6667 OTO
11/05 0.0003 6666 OTO
11/04 i 0.000001 9 OTO
11/04 0.0003 3333 OTO
11/01 0.001 1666 OTO
10/24 0.0002 1666 OTO
10/23 0.0002 100000 OTO
10/17 p 0.0002 16666 OTO
10/07 0.0002 16334 OTO
09/18 0.0001 1333 OTO
The company got back onto the Pink Sheets? Was there some sort of announcement or did you just happen to notice when looking at a quote. So I checked the quote and saw a bid of 0.005, which is very high compared to recent sales. I decided to put in a sell order at that price, just to see if it were for real and lo and behold it filled. So is there something going on here to bring in some new interest? I see nothing on AladdinTalk.
tZERO CEO Saum Noursalehi Provides Recap of 2019 & Preview of the Year Ahead
I will say that this is at least addressing all the right topics (more securities listed, more brokers, better liquidity).
https://seekingalpha.com/pr/17764108-tzero-ceo-saum-noursalehi-provides-recap-of-2019-preview-of-year-ahead
NEW YORK--(BUSINESS WIRE)-- tZERO, the global leader in blockchain innovation for capital markets, released today the following letter to investors from CEO Saum Noursalehi.
Dear Investors,
With an exciting year upon us, I want to provide a recap of our progress over the last year and preview some of what is in store for tZERO in 2020, a year that we believe will be an inflection point for the company. Overall, industry adoption of digital securities continues to progress. Over the past year we saw increases in institutional involvement, as well as advancements in technology and regulatory engagement. We anticipate these trends to continue in 2020.
Much of our focus last year was on building. We allocated our capital, both human and financial, on acquiring the necessary regulatory approvals (which is on-going), developing our trading/digital securities technology, and building the leadership team necessary to advance our company vision. Over the course of 2019, we launched trading on the tZERO ATS (formerly known as PRO Securities ATS), traded our first digital securities, subscribed additional broker-dealers, launched the tZERO Crypto app, worked with management at the Boston Security Token Exchange (BSTX) to file a proposed rulebook, and received several patents, protecting our ecosystem. We believe our progress last year lays the groundwork for our continued success.
In addition to these achievements, we also built a world-class leadership team. In our view, we have the right mix of capital markets, regulatory and technology expertise to drive the adoption of our end-to-end ecosystem. I could not have done this without the help of Steve Hopkins, who over the last year helped me staff up and focus our organization. Having accomplished these objectives, Steve is moving on from the firm. I thank him for his dedicated service.
With the right leadership team and technology and regulatory framework in place, we are shifting our focus to growth and adoption. This includes two overarching priorities on the supply and demand side of our business: trading more digital securities, and enhancing liquidity on the tZERO ATS. Both are areas we have made meaningful progress.
More Digital Securities
I am pleased to report, we anticipate trading our third digital security on the tZERO ATS, in the coming weeks. I am encouraged by our recent progress and the robust pipeline that our team has developed over the past few months. While we set an ambitious objective of trading up to five new digital securities by the end of 2019, we and our partners, including the external broker-dealer participants, have to carefully work through legal and financial due diligence, regulatory matters and operations to ensure that only high-quality assets trade on the tZERO ATS. As our partners work through more of these new securities, we expect to see significant efficiencies of scale.
While digital securities are still in their early stages, we are seeing an increased level of interest and acceptance among both issuers and investors. It is important to keep in mind that many of the issuers intending to trade on the tZERO ATS are doing so in conjunction with a new capital raise. As a result, the timing for when these new securities trade depends on broader corporate strategies, the speed of the capital raise process and regulatory considerations. With that in mind, we continue to make progress filling the queue of digital securities intending to trade on the tZERO ATS. As you may recall, we recently signed an agreement with Alliance Investments to tokenize River Plaza, which commenced its capital raise process this quarter.
Furthermore, we are in late-stage discussions with several issuers that we expect to sign in the coming months. Lastly, our long-term pipeline of potential issuers now exceeds 200. These issuers are diverse in nature, spanning real estate, investment funds, technology, film and pharmaceutical companies. In the near term we expect real estate to be a leading asset class, followed by funds and other private companies.
Enhance Liquidity
The second priority is to continue to increase the pool of investors that trade on the tZERO ATS. In addition to Dinosaur Financial, tZERO ATS has signed agreements with five additional broker-dealers, and we are working on getting them live so their customers can begin trading on the tZERO ATS as soon as possible. Over the last year we have had discussions with over 100 broker-dealers, and we are currently in active discussions with several dozen broker-dealers.
We continue to make progress advancing our retail broker-dealer, tZERO Markets. This is an important initiative as it will allow us to integrate our web and mobile app experiences in the future, enabling investors to trade digital securities and cryptocurrencies on one platform. We are working closely with regulators and are targeting a launch of tZERO Markets in the first half of this year.
BSTX
We have been making progress advancing our BSTX joint venture with BOX Digital Markets. This exchange aims to serve mature companies looking for a more efficient and transparent way to trade and raise capital through leveraging distributed ledger and smart contract technology. The SEC recently announced an amendment to the BSTX rulebook and commenced a new comment period. We currently expect to receive a decision from the SEC in Q2 2020.
In closing, I would like to address our capital raising priorities. As Overstock management mentioned recently, it is committed to funding tZERO. As our business continues to develop in the first half of the year and we continue to hit milestones and prove out the business model further, it may become appropriate to approach external sources of capital in late 2020 or 2021. We would only do this, however, in a manner that enhances our business and stakeholder value.
tZERO has built the most robust and active digital security ecosystem in the marketplace to date. We believe the most effective way to increase value for our stakeholders, including TZROP investors, is by focusing on growing the supply and demand side of our business. This will be achieved by trading more assets, enhancing liquidity and launching BSTX. I am more confident in the company’s prospects than ever before, and I look forward to keeping you abreast of our progress in the year ahead.
Respectfully,
Saum Noursalehi
CEO, tZERO
Congrats on your quick trades. I expect that the share price will continue to jump up and slide back for a while. I would join in, but I just don't have the discipline to follow through on a plan like that.
I voted yes, but I don't think it is actually a good idea. If the idea is to show off the tzero platform, people will be put through a lot of hassle just to be disappointed. If the objective is secretly to create a short squeeze then and somehow that does come to pass, well good for us then. I voted yes because a "no" result would be bad for the company image.
MGX Minerals Announces Supreme Court of British Columbia Confirms Jared Lazerson is the President and CEO of MGX Minerals Inc.
---
???? Should I have known that this was going on? Does anyone know the backstory?
---
Thu January 23, 2020 8:45 AM|Accesswire|About: MGXMF
VANCOUVER, BC / ACCESSWIRE / January 23, 2020 / MGX Minerals Inc. (MGXMF) ("MGX" or the "Company") (CSE:XMG)(FKT:1MG)(OTCQB:MGXMF) reports at a meeting of the directors of MGX on October 7, 2019, two of the Company's directors, Lyndon Patrick and Michael Reimann, put forward a motion to remove Jared Lazerson as the Company's President, CEO and signing authority. Messrs. Patrick and Reimann voted in favour of the motion. The Company's other two directors, Andris Kikauka and Mr. Lazerson voted against the motion. Mr. Lazerson also exercised a casting vote against the motion, as authorized by the Company's articles. The motion was declared defeated.
Following the October 7, 2019 board meeting, Mr. Reimann issued news releases suggesting that Mr. Lazerson had been removed as the Company's President, CEO, and signing authority. Messrs. Patrick and Reimann took the position that Mr. Lazerson was prohibited under the Company's articles and the "disclosable interest" provisions of the British Columbia Business Corporations Act from voting on the motion to remove him as President, CEO, and signing authority.
On December 5, 2019, Messrs. Patrick and Reimann filed a Petition with the Supreme Court of British Columbia seeking, among other things, a declaration that the motion of October 7, 2019 to remove Mr. Lazerson as the President, CEO and signing authority of MGX had been duly passed.
Lawyers representing MGX, Mr. Lazerson, and Messrs. Patrick and Reimann appeared in court on January 17, 2020 to argue whether Mr. Lazerson was entitled to vote on the October 7, 2019 motion, and by extension, whether Mr. Lazerson is still the President, CEO, and signing authority of MGX.
Madam Justice Fitzpatrick of the Supreme Court of British Columbia delivered her decision on January 17, 2020 at the conclusion of the legal arguments. The Court ruled that Mr. Lazerson was not prohibited by the Company's articles or the Business Corporations Act from voting on the October 7, 2019 motion. The Court also ruled that Messrs. Patrick and Reimann must pay legal costs to both MGX and Mr. Lazerson.
The Court decision of January 17, 2020 confirms that Mr. Lazerson is, and at all times since October 7, 2019 has been, the Company's President, CEO, and signing authority.
The remaining aspects of the Petition filed by Messrs. Patrick and Reimann were adjourned generally.
That is indeed very impressive. Here is a link to the announcement put out by the New York Power Authority. https://www.nypa.gov/news/press-releases/2020/20200117-zinc . The info is about the same, but it is nice to see it put out by a neutral party, rather than the company itself. I am tempted to add to my $200 worth that I already have from the spin off. I do have to remind myself that one of the things that attracted me to MGX Minerals was when I saw that the state of California was giving them some number of dollars to work on extracting minerals from the Salton Sea. As far as I can tell nothing came of that. Sometimes agencies are required by law to fund certain sorts of research projects even when they don't care about them, so the funding doesn't really indicate interest. But in this case it does seem like there is real interest, and if they can perform it might be gigantic. I think I've talked myself into this.
It seems like we hit a pretty solid floor and that there is some ongoing interest in the stock. I wonder if the interest is rooted more in the retail or the blockchain. I am not optimistic about the digital dividend situation will play out well. While there might be some buying by short sellers to get out before the distribution, I think that there are a lot of people who would (if they are aware of what is going on) want to sell rather receive it. There is no problem for anyone to receive the dividend as far as I can tell, but you won't be able to sell it without opening a Dinosaur account. Currently Canadians can't do that. It also looks like it could be tricky for holders in IRAs and 401Ks.
Ultimately I would like people not to have to have a separate account to own and trade the securities that live on the tZERO blockchain, (e.g., you could own them in your Etrade acct). Is that where this is heading?
That video was somewhat encouraging, emphasizing the breadth of their blockchain business. I still think Tzero and Dinosaur are not ready for prime time, and am afraid that the distribution of the digital dividend, if it occurs, will likely be a flop. The idea is that it will get people on board, but as things look right now on Dinosaur, I think their experience will be bad. He said that there are a handful of broker/dealers signed up. I wonder what that means exactly.
Unusual Options Activity
This comes from briefing.com, under the category of Bullish Call Activity:
"OSTK Mar 7.5 calls (volume: 6670, open int: 300, implied vol: ~97%, prev day implied vol: 79%). Co is expected to report earnings mid-March."
The term "implied vol" is Implied Volatility. I tried reading about it, but didn't really get it well enough to interpret the numbers. The current bid for March 20, 2020 $7.50 call options is $1.65 with the share price at 8.18. So for the option buyers to break even, the share price would have to hit $9.15 by March 20.
Another interesting Seeking Alpha article. This guy is a short, but there is a lot of information about the digital dividend.
https://seekingalpha.com/article/4315936-overstocks-shares-almost-dormant
------
Overstock's Shares Have Been 'Almost Dormant'
Jan. 9, 2020 7:46 AM ET|3 comments | About: Overstock.com, Inc. (OSTK)
The Stock Stooge
The Stock Stooge
Long/short equity, Growth, long-term horizon
(1,025 followers)
Summary
Overstock's shares have been trading in a narrow trading range.
Shareholders are set to vote to approve a digital dividend on February 13th. I expect it will be approved.
Many of the issues affecting the digital dividend still apply. It will be a real pain for anyone receiving it.
Meanwhile the company continues to lose money and is now funding operating losses through an "at the market" offering.
"Almost Dormant"
For the last 8 weeks, Overstock's (OSTK) shares have traded within a fairly narrow range. One might say that the stock has been "almost dormant". Of course I am sarcastically borrowing the phrase that new CEO Jonathan Johnson used last fall to describe the pending SEC investigation that began in February 2018. In an interview in September 2019, Johnson said that he believed the SEC investigation was "almost dormant". The market interpreted this as you would expect, and the stock doubled from $15 to $30 over the next month. Then in November the company disclosed in its 10-Q that it received a subpoena from the SEC on October 7, 2019, requesting documents related to the company's planned digital dividend and its 10b-5-1 plans for its officers in effect during the period from January 1, 2018 through October 7, 2019. The SEC also made requests regarding its failed investment from GSR Capital Ltd. and communications with its former CEO, Patrick Byrne. The stock dropped for several reasons, one of which is this SEC investigation, and now trades in a fairly narrow range between $7 and $9. This is hardly the high level of volatility that traders have come to expect out of Overstock shares. But volatility may be coming back.
The Digital Dividend
One of the other major themes moving Overstock over the last several months has been the digital dividend. Of course confusion around the dividend was the primary cause of the spike in shares in September, and the failure and withdrawal of the digital dividend in October was the primary cause of the fall back to earth. But now the digital dividend is back, and shareholders of record as of December are set to vote on several proposals related to the dividend on February 13th. If the proposals are approved, the company will issue the digital dividend promptly thereafter. As was the case last fall, the digital dividend will be a share of preferred stock that will trade only on the alternative trading system operated by the company's subsidiary, tZERO. The company will issue one share of preferred stock for every 10 shares of Overstock stock (or one for every 20 shares of Overstock stock depending on which proposals are approved at the February 13th meeting). (see proxy)
The company has made some improvements to the digital dividend plan since last fall. Most importantly, they've registered the preferred stock with the SEC by including the security in their S-3 shelf. As a result, the preferred shares will be freely tradable from day 1, a significant improvement compared to the 6 month hold period required under the company's plan last fall. Also improved are various technical transfer restrictions that are being cleaned up by the shareholder vote, which will allow for transfers in the case of death, divorce, etc.
There Are Still Issues...
But many of the same issues that plagued the last planned digital dividend continue to apply to the current proposal. The main issues I see are:
Potential technical issues. tZERO has, to date, only handled maybe a dozen trades on its platform total. Was any of that done manually? How can the company be confident that it can handle all of the complexities in a fully automated trading system?
Hassle to set up a Dinosaur account. Anyone who wants to receive the digital dividend must set up an account at Dinosaur, the only brokerage participating in the tZERO ATS. This is a hassle, especially if you don't own many shares.
The company hasn't explained how Dinosaur is going to know how many shares you own. Is Overstock expecting Dinosaur to contact your brokerage to see how many OSTK shares you own so that it knows how many preferred shares to credit to your account? The company hasn't explained how this will work, but I don't see any way it won't be another major hassle to be the go-between between Dinosaur and your broker, and whatever other paperwork is required.
Tax issues. Overstock hasn't stated how much of your tax basis in OSTK shares will be allocated to the digital dividend. You'll need to coordinate this with your broker and Dinosaur to ensure that your tax basis is reported consistently.
IRA issues. If you own OSTK shares in an IRA, I see no way that the digital dividend doesn't represent a withdrawal from your IRA, which would be an early withdrawal for anyone under the required age. That's a big problem.
Liquidity on the tZERO ATS will be limited. You may not be able to sell the digital dividend for as much as an OSTK share trades for.
Other issues. Who knows what else might come up, or issues that are out there that I haven't thought of or covered. For instance, I don't think there are any issues for international holders of OSTK to receive the digital dividend. But I am not sure whether Dinosaur will open any non-US accounts. If they don't, then non-US holders are out of luck.
For all of these reasons, I would not want to receive the digital dividend and would vote "no" on the company's proposals if I held OSTK stock. The company's argument to its shareholders is: yes, the digital dividend is a real pain, but it's the only way to jump start the tZERO exchange, and if the tZERO exchange succeeds, your OSTK shares will appreciate. I expect most shareholders will vote "yes".
Stock Squeeze Unlikely
Of course the other reason many OSTK holders like the digital dividend proposal is that it could cause a stock squeeze. This prospect was what really lit a fire under the stock last fall, but it was shut down on September 17, 2019 when the Options Clearing Corporation (NASDAQ:OCC) published a memo stating that options would not be adjusted for the digital dividend. The company withdrew the digital dividend the next day. The original OCC memo has since been removed from the OCC's website (please post if anyone has saved it). I see no reason that the company's new proposal, if approved by shareholders, would receive different treatment by the OCC as the only substantive difference now is that there is not a 6 month hold period. Market participants expect that brokerages will follow the instruction of the OCC regarding options and not require shorts to deliver the digital dividend (or its equivalent in cash) on borrowed shares. This last point is subject to some confusion in the market; brokerage margin agreements all provide for the borrower of "short" shares to pay amounts equal to the dividends on the borrowed shares to the lender, in cash or cash equivalent value for non-cash dividends. There is thus no scenario where shorts are "stuck" because they can't deliver a non-cash dividend; margin agreements provide for the payment of an equivalent cash amount if a borrowed stock pays a non-cash dividend.
In any event, we're largely back to where we started last fall before the original digital dividend plan was withdrawn, except without the prospect of a potential short squeeze. The company continues to lose money and is now selling shares in a new "at the market" offering launched in November. We will see in a few weeks how much stock they sold in the fourth quarter to fund ongoing operational losses.
Actually, We Don't Really Use The Blockchain
A final note on the proxy statement for the shareholder vote on the digital dividend that I thought was interesting. For all of the talk about how tZERO is utilizing blockchain technology to revolutionize stock settlement, I was surprised to read that, actually, stock settlement occurs via book-entry on a record maintained by the transfer agent, Computershare. The company then creates a public blockchain "courtesy copy" of the record Computershare maintains. The blockchain "courtesy copy" is "a convenience and with no controlling effect," according to Overstock. "Following Computershare's approval of any change in record ownership, the digital wallets on the blockchain are updated to match Computershare's conventional books and records." You can read about this on pages 20 and 29 of the proxy.
Disclosure: I am/we are short OSTK. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
OSTK on Seeking Alpha
https://seekingalpha.com/article/4315748-overstock-speculative-buy-significant-upside
Comments are overwhelmingly negative.
The previous plan to distribute the dividend was cancelled because of the havoc it would have created. The new plan somehow addresses this, so I don't expect there to be the same short squeeze dynamic. The last earnings call seems to touch on this, but I have a hard time pinning down exactly what is being said. Here is a link, maybe someone else can figure something out:
http://investors.overstock.com/static-files/b136acd0-51f5-47a1-9d83-a65d505cdf71
It's standard to compare a quarter with the same quarter of the previous year, but I don't think it's normal to title the document that way. It makes it seem like they are reporting the 2018 quarter for the first time, rather than just including a summary for comparison. I went onto their website ( http://mgxminerals.com/ca/financial-reports/ ) to look at the rest of their financial reports and what they have there stops with the fiscal 2018 annual report from July 2018.
Regardless of all that, the share price is certainly on a run. I think my shares have improved from -97% to -90%, so awesome. Did anyone here manage to get any shares down near the three cent level?
Same for me with Overstock. My lent out shares were returned to my account a week and a half ago.
What does the "and 2018" refer to in "For the Three Months Ended October 31, 2019 and 2018"?
The cover page of this document says "For the Three Months Ended October 31, 2019 and 2018." What does that mean exactly?