Elite Pharmaceuticals Inc (ELTP)

[no2koolaid]

Hmmm, thanks for the definition. But, my post did offer distinctive uses of the word "interference." What I was looking for was evidence in support of an opinion that somehow, somewhere, sometime, Nasrat interfered with the CFO or Elite. EVIDENCE...

To be certain, this is what I mean by evidence...

noun
that which tends to prove or disprove something; ground for belief; proof.
something that makes plain or clear; an indication or sign:
In Law, it means data presented to a court or jury in proof of the facts in issue and which may include the testimony of witnesses, records, documents, or objects.

Absent evidence, it is unclear how Nasrat's actions amounted to interference. While it is true that expert witnesses in a court of law can render a legal opinion - evidence in testimony - it is only after being subjected to the Daubert v. Merrill-Dow test. What that test relies upon is expert opinion born of education and experience related to the point in question. For example, despite being a court qualified expert in business, that does not mean I can render a medical opinion of the quality or efficacy of the drugs a company produces. And, the converse is true.

So, if an individual was asked to offer an expert opinion on the business that is Elite, there would be the need to ascertain the credentials of the individual and that means any and all business experience and education would be the assessed to determine the credibility of the witness. Thus, not merely the existence of the education and experience but the extent of the education and the question of where one garnered the experience, at what level, and for how long. So it is that I have seen alleged experts presented in court and subjected to the Daubert test judged to have insufficient relevant education and/or experience to render an expert opinion. Now, here is my point - if not already obvious. I have the requisite education and experience to render an expert opinion on the actions of a business - as that of Elite. In fact, I have passed Daubert and testified in many legal cases. This brings me to my point...my expert opinion of Elite as a business.

Businesses begin with the sole purpose of making money - ergo, to be profitable. If it is not designed to make money then it is a charity or a failure. Nothing in between. Further, it is not what they did not do or could have done better, it is what they have accomplished. Since my credentials pass the Daubert test, if asked if I considered Elite a successful business, the answer would be yes. The obvious follow-up question would be - Why? My answer would be because Elite is profitable. Moreover, it has been profitable for multiple consecutive quarters and its profit margins have grown Q-Q, which is evidence of a well-managed company. No poorly managed company moves from near bankruptcy to profitability without effective management. NO company!

I do not have to like Elite's management or agree with its every action. I did not invest in Elite as a momentum play. I took a long term view of Elite. It sells drugs and the effectiveness of their sale is not measured by total or increasing revenues, it is how they manage to turn those revenues into profit. At various times, PepsiCo, Coke, YUM Brands, P&G, Kraft Heinz, J&J, have all seen total revenues decrease YOY, while profitability increased. What explains that is simple, they sold off under-performing assets and managed their existing assets effectively (think Elite's sale of opioids in a market that is shrinking by 35% a year and their pivot to a more diversified portfolio grounded by CNS drugs that are in long term growth markets).

To keep the business operating, Elite had few choices for funding. As a small, unprofitable company their ability to get funding was limited and would have subjected the company to debt covenants that they might not have been able to reach. By using equity - their shares - they have nothing to repay and were able to achieve profitability and now use the money generated from their profit margins to fund the business.

Finally, the focus on the total shares held by Nasrat seems to be missing the reality that his loans and his use of shares helped Elite limp along until they began generating revenues. Moreover, what is seen from too many small and mid-sized companies is the CEO and other senior leaders hold too few shares or, at intervals, sell their shares. Nasrat has never sold a single share and this is another area frequently misunderstood.

It is a common practice to provide CEOs and other senior leaders access to wealth managers, often as part of their compensation practice. Even if Elite is not providing that resource, someone like Nasrat, with the level and complexity of wealth, would have engaged such services. Typically, wealth managers seek to have their clients sell some of their shares in a company they manage at various timelines. I would be shocked if Nasrat's wealth manager had not made that suggestion. Yet, he has held firm to his shares. Why is that? What would Nasrat say to his wealth manager about his holdings in Elite? Simple - he would say that he runs the company and understands intimately the direction it is going. So, why would he want to sell shares that will capture a multiple of the strike price? A wise wealth manager would listen and agree. Indeed, why sell shares - even if above water - when they are expected to produce a multiple? Why, indeed?

JMEO...Just my expert opinion.