Cold, not sure if you are being serious with your questions to rob, but I think he’s talking about some tutes sharing our frustration with management.
You know the thesis . . . the cell and gene therapy industry is about to take off, and when it does, it’s going to take little Cryoport along with it, so Cryoport is on the verge of tremendous growth. And no this thesis hasn’t changed. Smaller investors can get in before the largest institutions are able to establish positions and really move the stock.
Cryoport’s management wants to drive interest in the stock and increase institutional ownership. Last spring, instead of going to a smaller investment bank (Chardan for example) for their secondary, Cryoport decided to do a deal with Cowen and Needham to appear more legitimate, and gain access to better analyst coverage and institutional promotion. They priced it very low so their tute buddies would make some money and perform well. They got a taste which is nice, but in order to continue growing their relationships with institutional investors, management needs to have face to face meetings with prospective investors and give them something to chew on to keep them interested and show them how they will continue to make money. There is an expectation that management will provide accurate forecasts of earnings expectations and future contracts, and keep them in the loop when needing more capital for example. This management team may not be ready for the big leagues though, and aren’t doing this, and according to robert, it’s preventing larger institutional support. Is there going to be a change in management anytime soon? Not likely. (unless there’s a buyout of course)
I think the fair value for the stock is around $8-$9 with the expectation of revenues ramping next year from increased clinical trials, and the commercial contracts that have been announced. If management provided some details about the commercial contracts with Bristol Myers, Sanofi, J&J, and other pending commercial contracts, then perhaps the revenues could increase sooner and justify a higher stock price. Obviously management didn’t share much information about this during the conference call and discussed financing inventories and accounts receivables, and building out infrastructure in a couple logistics centers. And they were reported to have met recently with Deutsche. Now the last time Cryoport went to the capital markets, their share price was cut in half, so maybe there isn’t a lot of confidence that management is capable of making a good deal, and the stock probably sold off to the $6 level where an equity deal may get done. As I said in a previous post, Deutsche is known for debt financings so maybe this is what management is looking at. Institutional support is what will drive the stock price upwards again, but the financing issue and lack of new contract announcements are a couple of the reasons why the tutes are waiting, “volume’s been abysmal,” and the share price languishes below fair value. Another reason for the weakness is that there are probably one or more tutes that want to accumulate before the next run, and are “shaking the tree” to pick up some cheap shares and make CYRX appear weaker than it is. There isn’t a lot of liquidity and it’s difficult to accumulate a (relatively) large position without causing the price to rise too much. What Robert is hearing may be correct, but management WILL announce more commercial contracts, and when they do, and there’s money to be made, they’ll be back.
BTW - Re; 13F filings. Interesting to see some new positions initiated last quarter but it’s a joke. I personally own more shares than many of those “institutions” and I’m sure many on that second list do too.
