Why did NHLD price decline below $4.00?
Is it a short-term fluctuation?
On NHLD's February 23, 2015 1Q2015 earnings call, the CEO, Fagenson, said, "the Company has not heretofore issued guidance, and we have in the recent weeks decided that when information such as that becomes more currently available, that we’re going to try and provide that type of information to the street, which we’ve never done before on a selective basis."
March quarter-end has passed, and NHLD has not said anything. The assumption is this stock price fluctuation has been caused by short-term factors. Perhaps, 1. Buyers who purchased shares expecting a pop are now selling. 2. Short-sellers who can now short NHLD are now shorting NHLD stock, and trying to entice others to sell (March 13, 2015 NHLD short interest was 5,545 shares; April 10, 2015 is the next short interest dissemination date).
The $22 million pending and threatened litigation amount and the alternative products issue were both made public on February 17, 2015, which was well before the price decline. The pending and threatened litigation amount has fluctuated by five or six million dollars in other quarters. NHLD followed accounting literature (as weak as it is) when it accrued the probable and reasonably estimable amount of less than a million dollars. NHLD also beefed up its 1Q2015 10-Q litigation language to be consistent with other parts of its recent 10-K, which were already incorporated into the 10-Q anyway.
Regarding the alternative investment products issue, NHLD was clear on its February 23, 2015 1Q2015 earnings call when Fagenson said, "While we're able to maintain our top-line revenue levels, operating income declined and was impacted by our lower marginal revenue mix which was due in large part to decline in alternative investment product sales. As disclosed in our earning release last week, October was a very good month financially; however on October 29th one of our major issues of alternative investment products made a series of announcements that introduced questions about their accounting practices.
"Accordingly in November, we immediately suspended the availability of the issues products on our platform which actions negatively affected revenue and net income for the quarter. We believe this decision and action to suspend availability of these products made in the best interest of our customers, our retail branch network as well as our shareholders was a correct decision for us to make.
"Looking forward we remain hopeful that with the additional information that's now available regarding the issue and the redemption of availability of a certain select group of their products together with a much expanded array of alternative products that are now being offered throughout our network, that we will see sales of alternatives rebound in our current successive quarters to access for 2015."
One curious bit of silence from NHLD is regarding its planned "non-dealer road show" to its "targeted list of obvious small cap institutions...family offices and...other retail networks." NHLD's president, Goldwasser, said NHLD would start the road show in late March or April after its up-listing to NASDAQ.
Maybe, NHLD will make an announcement soon.
