Investorcg, You raise a good point about Ronin regarding the prospect that they become disenchanted with Avid prospects and decide to exit their position.
My observation is that the analyst one year price target of a post split adjusted $14 pps (or higher) falls into focus with a combination of four factors exhibiting their influence:
1. Growth in Avid sales as the Myford facility capacity gets fully subscribed and the third Avid mabufacturing facility gets enough order interest to be built (on Friday, PPHM told share holders that this development is taking longer due to existing customer need changes but there are developments with new customers that might accelerate progress).
2. The market decides to value Avid at more than a 4X price to sales ratio or PPHM proprietary tech at more than zero. (note that Avid annual sales at $60 million applied across 45 million shares with a PS of 4 translates to about $5.33 per share valuation, or about what shares are trading at today).
3. PPHM reduces its research technology development budget to fit under the $20 million in net Avid earnings (1/3rd of sales), or whatever value follows after Avid sales growth. (currently, Avid earnings are covering PPHM research plus PPHM is still posting losses, albeit, smaller losses, as they spend cash raised from ATM sales to support the wind down of PPHM research obligations or initiate new research).
4. PPHM establishes commercial value for some of its proprietary technology, such as new cash flow from an Exosomes test kit or whatever. (The investor call last Friday suggested this is a viable possibility but, as usual, was tentative and inconclusive). Does PPHM tech really warrant a zero valuation in the pps?
All four of these paths have been announced as a work in progress as part of the PPHM business plan-- obviously, progress towards analyst target success is to be determined and warrants an update after Friday's investors call.
Exiting their PPHM position such that the pps is driven down would appear to have Ronin leaving money on the table for another party to just step in and pick up. Current Avid earnings about balances support of the current share price. PPHM delivery on any of items one through four above to support achievement of that analyst price target suggests that PPHM pps could about triple over the next year or two. That seems to be a big carrot for Ronin to hang around for, regardless of whether they win Board seats or management control of PPHM.
Best wishes and IMO.
KT
