I'm not a shareholder here but just going over quarterlies for a holding company I own I came across this and thought that I would post it to the board.
Sold 65% of our SONM position at $0.58. We now neither believe in the short term, nor the long term.
Sonim Technologies, Inc. (NASDAQ: SONM) – In Q2 2021, SONM issued a surprise announcement with its year-end 2020 results that the SEC investigation, believed to be close to completion, was being extended; thus greater than expected pressure on SONM's cash position would occur in future quarters. Following this announcement, SONM noted its cash position may not be enough to fund operations of the company without additional capital raises. Following this announcement as well as reporting poor financial results, the CEO was removed. What was once a promising business environment following our lead in recapitalizing the company at $0.75 last year, has turned into a business we have lost faith in. The biggest miss was being caught by surprise that one of their biggest customers would cancel a phone that SONM had invested millions of dollars of capital on. That said another big mistake was becoming an observer to the Board at SONM. Following the recapitalization, and a couple of decent financial quarters, SONM’s stock advanced over 100% from our entry price. The problem 180 faced was the restriction placed on us as insiders that limited our ability to transact in the stock. We simply missed the window to sell at a gain on our investment that was afforded to every other shareholder who was free to trade. The reasons for owning the business have materially changed and in sticking to our sell discipline, we have decided to exit the position. It is a lesson learned in how being on boards has the potential to negatively impact your ability to create value for your shareholders. Of course, if your original long-term thesis plays out the way you envision, this headwind wouldn’t occur. In SONM’s case, we got the thesis wrong. The stock declined 31.9% this quarter and hurt our NAV by $0.14 per share.
Subsequent to the end of the quarter, we sold the remainder of our holdings of SONM. We have often talked about how we do our best to minimize our mistakes while maximizing our successes. As much as we got this one wrong, the loss was contained to $1.3 million, or -28.7%. Part of the reason why the loss was contained was adherence to a strict buy discipline which takes out much of the risk given the price we are paying for the business we are buying.
