Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
Stella...
1) The debt issue may be part of the problem, not the solution
2) I am guessing, you are grossly underestimating Cryoport's capital requirements for both cap-ex and op-ex needs, and their time-line to profitability
3) There is no correlation between UNIS and Cryoport other than they are both publicly traded securities. BTW: UNIS's volume was 28,990. 100 lots were moving it.
4) There is nothing positive that can be taken away from what just happened
5) There will undoubtedly be a lower valuation for Cryoport because of what happened, which means the company will be worth less than it would have been, and there will be more dilution
6) If the offering price is too low, then the new issue will be over-subscribed and while the price may pop at first, initial investors will be induced to flip, which would cause unwanted volatility and more selling
7) That being said, I think Larry will find a way to get it done because, he has no choice. R&R doesn't make money and diminishes their standing on the street, if they don't get it done.
8) But, it doesn't mean that it will get done ...for sure.
I am probably the last one on this board to receive any information on what transpires at the corporate level at Cryoport. I am simply an observer of price action, and an odds player. I try to remain objective and unbiased so that I can deduce what is really happening. A great deal of my reasoning process is based on my past experiences, and the probability that given the same set of circumstances, similar results will be generated.
There is no doubt that there is more to the story than is being revealed in the press release. R&R may have agreed to a firm commitment underwriting, but they also had a "market-out" clause, that allowed them to back out, if the offering was under-subscribed.
As a rule investors prefer to see the money raised in an SEO applied to growing the business, and will usually demand a lower valuation if the capital raised, is going to be used to pay down debt. This may have played a role, but it is pure conjecture on my part. I am assuming that one of the larger investors is putting on the squeeze for a better valuation, and the breakdown in negotiations isn't because of poor "market conditions."
discipline: Below is a post of mine that went largely ignored. It was meant to illustrate the very speculative nature of start-ups and immature companies. At every stage in the commercialization cycle of a new business, management must take into account and mitigate the various forms of risks that are present. No matter how experienced, skilled, or forward looking management is, there are going to be circumstances that are beyond their control. There is a direct relationship between risk and reward: the greater the potential upside, the greater the risks involved. (As an aside, it's worth noting that the converse is not necessarily true: situations that involve great risk sometimes have little or no upside. These are stupid risks to take, and the shareholders must decide if mangement took any of these. It's also up to the members of the board to decide, if the risk(s) is now too great, for the potential reward.
For anyone interested in playing a little game, please answer the following questions. The more responses, the larger the sample, the more accurate the survey. Optimists and cynics are not only equally welcomed, but are encouraged to participate.
On a scale from 0% to 100%, please list the percentage of risk you think has been eliminated in each category for Cryoport. Please be realistic and objective. There is no such thing as 100% of risk being eliminated, nor is there 0% chance for opportunity. By the very nature of its definition, risk exists in any situation where there is a possibility of an outcome that we would not like.
Unforeseen circumstances and their negative consequences are the very essence of risk. Since we cannot predict the future, there is always going to be uncertainty, and hence, there is always going to be some percentage of risk. Conversely, there is always going to be some percentage for a favorable juncture of circumstances and the creation of opportunity.
1. What is the chance that you've identified a genuine market need?
2. What is the chance that your addressable market is as big as you think it is, and that it is growing?
3. What is the chance that you can actually execute your business plan and implement your innovation?
4. What is the chance that you can make a large enough profit on your product?
5. What is the chance that you have assembled the right management team to do the job?
6. What is the chance that you have assessed your competition correctly, both in size and competitiveness?
7. What is the chance that you don't get sued for IP infringement or something else.
8. What is the chance that you won't get buried in regulatory red tape domestically or internationally ?
9. What is the chance that you can raise money, it's enough, and you can raise money again if you need to?
10.What is the chance that nothing else goes wrong, including the the economy, the soundness of you business strategy, et al.
I like the Cryoport story, but then again, its a story that really isn't very novel. There are a myriad of companies, both private and public, with the same story, or an even better story. I am just trying to illustrate, that just because, a company has a good story, doesn't mean it's a lay up...far from it. The odds of the kind of success, that people are expecting out of Cryoport, is about 30%. It is that high largely because they now have experienced management.
Otherwise, it would have about an 18% chance, and that is in good economic times.
Capital is only one area that is critical for success, you take your eye off the others, and you lose track of the big picture. That is why its so difficult for start ups to become successful.
I'll illustrate my point, by answering the questions that I posed.
I'll be extremely generous, and give a 90% chance of eliminating all the risks in each category.
Individually, the risks may seem manageable, but collectively, they represent a larger obstacle to overcome for an immature company. You might take comfort in the fact that any one of these risk factors presents only a 10% chance of affecting the company.
However, the probability of surviving all ten risk factors( assuming that each risk factors is statistically independent of each other) is the product of multiplying the percentages...35%.
hstrader: You don't get it. The market isn't dictating the price of the offering...the price of the offering is dictating the price of the market. Please read #5809. They( R&R and Larry) already know what price, or what valuation of the company, they would like to see the offering go off at. But probably, one of the large investors isn't comfortable with the price or the terms that have been previously set forth in The S1. Forget about what you are seeing trading at the moment...its all noise. They will eventually come to terms with the investors,(agree on a price)and then they will manipulate the market to that price.
walrus: I'm afraid CEO is 100% correct. None of what you are saying makes any sense.
Market Makers(MMs)can serve two functions. They can act as a market maker, or can act as a broker, or act as both simultaneously.
When they function as MM, they " make a market". This means they are willing to buy it on the bid and sell it on the offer, in an attempt to make money on the spread, and are also willing to build a position in the stock, if they can only get on one side of the trade. By acting as a market maker, the MM is providing liquidity to the market, and is taking risk while serving this function. As a rule,a MM will make a tighter market in a liquid market, and a wider market in a thin market, to compensate for the relative risk. For taking on this risk and providing liquidity to the market, MMs are allowed certain advantages over you and me.
If the MM is acting as a broker, he is representing a customer's order, and is subject to certain rules governing how he works the order, and these rules change from exchange to exchange. If he is working a customer order, and trading for his own account at the same time, there are rules that govern that process.
Unless you are extremely experienced at reading the montage, it is virtually impossible to decipher what MMs are doing. They could be working an order, they could be making a market, they could be getting into a position, or they could be banging out of a position. They could be on the buy side bidding for size, and going through another market maker in order to sell, or they may look they have finished buying or selling, and then refresh their order. They might be working a scale order at 0.05 increments, or working a contingency order.
The majority of what you witness MMs doing, is part of their normal functions as a MM. You are not seeing price manipulation in the strictest sense.
Why does there always have to be a story? The real story is... there is no story. Management isn't going to sell stock in front of an offering. Get real!
How is it good? Why does it matter? It's just part of their compensation package.
Looks like they just got vested in some options...says nothing about them exercising them.
I heard the Obama administration is looking for new spin doctors... God knows they needs it, and God knows you guys are qualified for the position. Cryoport's Q4 income was up $10,000, but expenses were up $200,000. Not much bang for your buck. There are hot dog carts in Manhattan generating more income than Cryoport. A busy cart can generate $100,000 in annual sales, and the start-up costs are minimal. You can get a basic cart for about $2,700 -- though a tricked-out cart with a trailer can go up to $20,000. You'd require about another $1,000 for initial inventory, licensing fees and other expenses, and you would probably net about 80%, which would put the hot dog vendor... in the wiener's circle.
dog, stella...yeah, doesn't quite give me a chubby, yet!
Thanks OT. People need to realize that its R&R's game now, but the investor's ball. Rodman, not only has money on the line, but has its reputation on the line. Optimally, they would like to determine a price that makes everybody happy, and affords them the least amount of risk. Future clients and future investors are vigilant, and a failure to set the best price, may result in R&R losing business in the future.
The investors are most likely very sophisticated, and the interest in the offering may be dominated by one or two larger investors...so guess who's calling the shots. They are, of course, looking to get a low valuation for the company, and conversely Cryoport would like a higher valuation. Rodman needs to find a happy medium for the investor's sake, the issuer's sake, and of course for their own sake.
As was described in the article, dog called to our attention, the climate for IPOs and SEOs has cooled off considerably...probably for good reasons. The broader market rallied close to 70% off the March lows, and is now correcting pretty hard. Accordingly, the investment community is going to demand a risk discount for IPO and SEO valuations.
Even though the man at the helm is extraordinarily competent, Cryoport is not operating from a position of strength. A sophisticated investor will realize this, and use it to his advantage, to perhaps negotiate a more favorable valuation and a better deal. The deal is going to get done.... Cryoport has no choice, and R&R's reputation is on the line. The deal is just going to get done with a cheaper valuation or more advantageous structure for the investors. My guess for the price of the offering.... $8.00 or $7.50.
dwalrus: And you hit the nail on the head when you warned the board not to openly conspire to peg the price of CYRX. Yeah, the SEC has bigger fish to fry than the participants on this board, but I don't think anyone on this board would announce publicly, they cheat on their income taxes. Either way, you obviously realized how ludicrous and futile their attempts were to dictate the price of the offering. All they accomplished was a better P&L for the MMs that day.
dog:
As I stated in a previous post...>>The actual pricing of the offering is a matter of agreement between Cryoport and Rodman. Larry is looking for the highest price that will permit the distribution of the number of shares being offered. Rodman is looking for a price that assures that the offering will be oversubscribed and assures that there will be strength in the secondary market.<<
However, Rodman and underwriters of offerings, in general, have a continuing relationship with their investors, while they have a single or limited number of contacts with the issuing firm. This continuing relationship with the investors leads to an important role for contracting mechanisms, such as the credible commitment to stabilize, and to set the terms and conditions of the offer to provide investors with adequate returns, while still tying to satisfy the issuer with a fair offer price. The pricing of the offering and the stabilization of price by the underwriter in the secondary market can be thought of as a bonding mechanism between the investors and the underwriter. Stabilizing bids may have the effect of rewarding investors who participate in an IPO that appears overpriced.
But not only is the onus of the pricing on the underwriter, but so is the risk. Underwriters have to purchase the unsold shares of a firm commitment offering and in turn accept the financial risks of reselling the shares in
the open market after issuance. That is, underwriters bear the proceeds risk for their firm-commitment offerings. The reason why the market might not be able to complete the whole distribution of an offering is that the offer price is too high or the demand forthe offering is lower than the supply.
There are many factors that can affect the pricing process, including current economic conditions, market volatility, current climate for IPOs and SEOs and the investment community's perception of risk, the size of the offering, and what the funds are being used for.
And from another previous post of mine...>>In reference to your question about Rodman's " firm commitment". The paragraph you referenced is called a "market-out clause" that under limited circumstances permits the underwriters not to purchase the securities at closing. Because this essentially changes the underwriting agreement to a "best efforts" agreement, the SEC requires the proceeds to be escrowed.
That being said, I think you are being overly optimistic about the timeline. The SEC may, and often does, issue multiple comments, and subsequently the issuer has to file multiple amendments (S1-As), which can and often does take months.
Rodman will really not have a clear picture regarding demand for the offering till after the road show. Calls that are made during the waiting period are a big part of the marketing effort, and also give the brokers indications of interest, they hope to turn into offers to buy, the moment the registration statement becomes effective. The real selling effort however, is the road show(s) attended by institutional investors, investor advisers, analysts, and broker-dealer representatives. The reaction of the invitees to the road shows, permits the lead underwriter and issuer to gauge the demand for the offering, and is also the biggest factor in the pricing and sizing of the offering.<<
I guess what I'm trying to say, and the point I'm always trying to get across; is that there is no such thing as a lay-up, there are more risks along the way to success, than people take into account... and, shit always happens.
NO, I'm not asking you what the definition of "cap and trade" is, I'm telling you it's meaningless. It might as well be "cap and gown", or "bust a cap", because it has absolutely no effect on the price of the EXC. Once again... it's a yield play. We are in a low growth, low interest rate environment, and it is expected to stay that way for quite a while, hence the catchphrase...the New Normal. Utilities seem to make sense, because they are yielding 5-6%. Utilities are de facto treasuries or at least like preferred stock or corporates, and should be treated accordingly. So, it doesn't matter one iota about what the environmentalists are saying. Gross is buying utilities because they are yielding more than treasuries, are taxed less, and are less sensitive to inflation, and in the long run should outperform equities because of the New Normal's status quo.
I guess this all makes sense if you are looking to park cash for a long period of time. But if capital is allegedly flowing into utilities, why are they getting killed. Past 12 months SPX is up about 35%, while XLU is only up 5%. That's called under performance or poor relative strength. In addition, XLU has already taken out the major support trend-line off the March lows and given up its 200MA. So the bears appear to still be in control. If you are looking at it as a trade, I'd look elsewhere.
Bottom line, is you first have to ask yourself if you want to be long equities in the first place, and if you do, what sectors, and what stocks are the strongest, and give you the highest probability of making money in the near term.
Stocks go up, because there are large amounts of capital flowing into the market, the sector, and then the stock, and there is usually a motive or "rationale" for the capital to be flowing there.
Forget about cap and trade, and green tech, and whatever else you are reading on the internet, and especially forget about what you read from the "anal"ysts. Learn to listen to what the market is telling you instead, and you will be much better off.
dog: I would have been more succinct and simply said...man who tries to pick bottom, often ends up with smelly fingers. But that was an excellent and thorough technical analysis of EXC... and a shameless plug for your new website. I loved it!!! Bottom line: there are a lot of people on this board who could benefit greatly from the information you dispense on your site.
Stella,
Cap and trade? It's all about yield. Low growth, low interest rate environment... a company's stock should yield more than it's less risky debt, as Bill Gross says. EXC yields 4.8%, and Bill Gross is buying utilities, so you're in good company, but technically...EXC looks like it has considerably more room to go to the downside, especially if rates rise... which looks likely. P.S. Interesting take on the machinations of the financial world.
dwalrus: Funny and clueless.
I realize it's difficult to divert one's attention from Stockdude's poignant comments, but here's an interesting article nevertheless...
http://www.truthout.org/the-battle-titans-jpmorgan-vs-goldman-sachs-or-why-market-was-down-7-days-a-row56526
As long as investors have a hard-on for Cryoport, it doesn't matter!
Stella, It should read... When you look at WFWL...it's a total disaster, it's doomed, it's doomed! Either way, you gotta love the guy. Works out of Hong Kong, but lives in Chiang Mai, in Northern Thailand...and loves to party.
Damn those bashers... they're so biased!
Thanks. Proof, once again, you can't destroy matter.
CP: First of all you are assuming the debenture would be converted, which is not necessarily the case. The debt could have been paid off. Regardless, paying off approximately half of the debt, only reduces the potential addition of 12,000,000 shares in half to 6,000,000. It doesn't magically wash out the shares issued in the offering.
Current Shares of Common Stock Outstanding 50MM
$15,000,000 Equity Offering @ $2.00 7.5MM
$6,000,000 debenture paid off 00MM
Total 57.5MM
Current Shares of common stock outstanding 50MM
$15,000,000 @ $2.00 7.5MM
$$6,000,000 debenture converted into equity 12MM
Total 69.5MM
Current shares of common stock outstanding 50MM
$15,000,000 @ $2.00 7.5MM
$3,000,000 debenture converted into equity 6.0MM
Total 63.5MM
Long: I don't think your arguments contradict anything Dog stated. Dog is saying CYRX's price action has led him to believe Cyrx warrants a long term hold. "The first statement tells of my "belief" that we have turned a corner based on fundamental developments within the company. " QED
Before you can truly appreciate the point he is trying to make, I think you need to look at it from his perspective. By that I mean, the perspective of a professional active trader. I am referring to actually supporting yourself and your family, solely from your trading income. Pragmatically speaking, unless you are extremely well capitalized, and can go long periods of time without making money, buy-and-hold isn't the best way to go. CYRX is a case in point. I don't think there are too many on this board who have been holding CYRX for the last 4 years, that could have paid the bills based on their ROI in CYRX.
While you will never hit the proverbial home-run while short term trading, it is the best way to "ring the register" or make money with consistency, and in no way does it preclude you from having long term trades on concurrently. And TA, if used properly, is the most important tool that will enable you to make money on a daily basis. Not only is the probability higher of making profitable trades, but the risk is also less, when trading short term.
Stella, what's with you and your adjusted for inflation? Unless you are comparing returns over different time periods, with different rates of inflation, it doesn't matter!!! For the most part, ROI is scrutinized on a risk adjusted basis,i.e. Sortino ratio, or Sharpe ratio.
Bro-hug-double-fist-back-tap, to Peyton Manning and the Colts, and to Drew Brees and the Saints.
My condolences to Perry Mason Stella and the Jets, and BBF and the Vikings.
Here's to the Cryoport half-time show !!! Maybe not in 2010, but perhaps in 2011.
Whatever the price of the offering, there is going to be dilution...just a question of how much. Approximately, $13.3 million net proceeds is going to be raised by this offering, with $3,266,995 of convertible debt getting paid down. As far as I know, that debt has not been converted into equity yet, and as such, is not currently part of the float. Regardless, of where the money being raised in the offering is spent, the immediate result is the float is going to become bigger, and there is going to be more supply, which needs to be offset by a commensurate or greater amount of demand, to prevent the price from falling.
Rocket Scientist Stella: How does a company raise $13.3 MM, by issuing new stock in an equity offering, with (not only) zero dilution to the existing shareholders, but an actual increase in their ownership percentage?
Short-against-the box- Stella, You either understand and believe in technical analysis, or you don't. You don't believe in it when it supports your position, and not believe in it, when it doesn't support your position. Technical analysis doesn't concern itself with the "why" or "who" of price action, but the "what". Dog's interpretation accurately reflects "what" is happening with the price action... plain and simple. You can assume who is selling and buying, and why they are selling or buying, but it is just that...an assumption.
In my opinion (with the exception of dog) there is a tendency on this board to search for, and overweight evidence that supports everyone's bullish position. Generally speaking, this can be a major problem in trading, as it leads traders to become overconfident in their positions and stay in trades well after they should be abandoned. A simple example occurs when traders are in a position, and then focus mainly on the indicators or market behavior that supports staying in the position.
This is not to say, I am recommending getting out of your Cryoport longs, because I'm not. But to be happy with the weeks action, is a perfect example of the confirmation bias I am referring to above.
CYRX closed 0.12 lower on the week on huge volume, after attempting to take out last weeks high (and the 200MA) twice and failing. Every day this week there was a bullish directional bias to the day from the open throughout most of the day, but the action could never really be sustained, oscillating above and below fair value. What that tells us is that we had a relatively weak rally in what should have been a very strong news driven market. In a weak trending or non-trending market, we will tend to move away from fair value to probe trader/investor interest, which was the case on successive attempts at the $1.00-$1.05 level, which was followed by price rejection each time. This kind of price action suggests that CYRX needs to trade lower yet, to probe trader/investor interest at cheaper levels, before heading higher.
There are many reasons to be bullish Cryoport, but some of these factors have already been discounted or priced into the market, and then there is also the issue of dilution to contend with.
That being said, I still think the risk to the downside is minimal compared to the risk to the upside, implying traders/investors will not demand too much lower of a valuation, to compensate for the perceived negligible risk.
Off topic...but very interesting and informative. The 2010 Barron's Roundtable is out, featuring two of my favorite analysts/money mangers, Felix Zulauf and Marc Faber. Always a good read !!!
http://online.barrons.com/article/SB126359778174330009.html#articleTabs_panel_article%3D1
Then try listening to the market, instead of talking to it so much.
CEO: Sign of the times... In the current technological/regulatory environment, markets are becoming inordinately fragmented. Paradoxically, rule changes such as Reg NMS, order handling rules and decimalization, were supposed to encourage limit order display, and increase transparency.However, instead of leveling the playing field, we now live in a completely fragmented market, with 50 or so dark pools, 10 or so exchanges and liquidity displayed to privileged participants.
”
CEO...LOL. Never heard "fair value" compared to "MAD" (Mutual Assured Destruction). More like a "Nash Equilibrium" methinks.
tad: it's 0.83 @ 0.85 trading the offer, on the pinks
Dog: How do yo go from 1MM shares traded in 2 sessions(10X the average vol.) to zero? Are you telling me that EVERYONE that wants to be long CYRX is long, and EVERYONE that wants to sell has sold ?
CEO: Why don't you put out a high-ball and get things rolling?
Stockdude: If you really believe in what you are writing, why do you agonize over every down-tick and print? Relax...
Steve: Here's an excerpt of an e-mail I sent to doghousemine early Friday morning:>> I bought some stock Mon-Tues, but couldn't accumulate any size. Thought it would gap higher on the news, but to a large extent, the news may have already been priced in i.e., the recent rally. It's important CYRX pulls back, fills in, and shakes out those "tired" longs and momentum traders, and replaces them with longer term investors. Really don't know why investors would feel any sense of urgency to get long or chase the market however, when the float is (nearly) going to double in the near future, and the outstanding shares (fully diluted) is (nearly) going to triple. That's a lot of supply to be absorbed, and in addition, you have to contend with a possible reverse. But if big news continues to be released, then who knows. I'll try to get more on any weakness, but it will be so much easier when it's on the Naz...plus I'll be able to lever up.<<
However, there are other factors to consider. As BBF and Ceo pointed out, once the S-1 is effective, Roswell and Enable will be locked up, and that particular supply overhang will disappear. You also have to contend with Rodman's retail network promoting the offering, and momentum traders chasing the stock if it gets above the buck. In addition, there may be further deals announced.
Personally, I'm a buyer on any weakness, and as always I am scaling into my position, till I have accumulated my full position.
Steve: Yes, it does. however, the 1:12 ratio stipulated in the S-1 is the maximum ratio they are allowing for the split, not the desired ratio for the split. NASDAQ's minimum price requirement is $4, so do the math, basis where CYRX is trading. Obviously, the higher CYRX trades, the smaller the ratio required for the reverse, to meet the $4 listing requirement.