Groove Update on JRJR Networks

March 24, 2016 at 9:25 am 4 comments

Interesting trading action this week with JRJR Networks, as the stock has fallen significantly without any substantive company specific news or sector weakness and only a mildly negative broader market environment. While the price movement in JRJR Network’s shares generally over the last 30 days lends credence to our belief that some part of the naked short position may have been covered, we still believe that a substantial short interest continues to be part of the JRJR Networks story and we will be very interested to see where the REPORTED short interest count comes in after the close today.

We remain very bullish on JRJR Networks stock and believe that the Q4 report that should be filed within the next four trading days will put an end to what has been nearly six months of negative rumors about the company’s operations that have negatively impacted the stock as short sellers and those with an axe to grind took advantage of the vacuum of information by injecting rumors of all sorts of operational hazards and corporate misdeeds into that void. We believe that JRJR Network’s management has consistently chosen to take the long view, ignore the naysayers and keep their nose grindstone for the purpose of delivering results that will silence the critics. We are excited to see what that laser like focus on producing results will bring with the Q4 report, as we expect to see a company with improving margins and a vastly improved bottom line to go with the tremendous top line growth the company pre-announced. We believe the loss reported in Q3 (11 cents) will be more than halved, with significant margin improvements at Agel and Longaberger driving the company to reduce that loss to the 4-5 cent range. Anything better than that we will view as a pleasant surprise with very positive implications for the company’s momentum going forward. We note that Q1 will be essentially in the books by the time we have the Q4 conference call and we think management comments on the company’s progress could provide a catalyst for the shares to trade higher.

A question was posed by a Groove community participant and we wanted to address it here. The investors who have revealed their holdings for our calculation of the percentage of the public float that is owned by Groove readers have no agreement of any kind regarding those shares and all have made it very clear that they are acting independently, each in his own respective capacity with regard to acquiring, holding, voting or disposing of those shares. As of the most recent count, there was more than one shareholder approaching the 5% ownership threshold that would require a filing under Section 13d of the Exchange Act and all involved want to make it abundantly clear that each is acting independently and there will not be any filings or action taken as a group. Additionally, a significant number of those participating have indicated that they will not be providing updates on their holdings going forward.

JRJR Networks at yesterday’s closing price  of $1.21 represents a very low valuation ($43m market cap) for a company that is clearly gaining operating momentum and will likely produce $200m or more in revenue in the current calendar year.  We see many potential catalysts for upside beyond the operational results reported next week and again six weeks later and hope to get a clearer picture of what they stand on the Q4 call.

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Entry filed under: Uncategorized.

Groove Update – JRJR Holdings at 26% of Float JRJR Networks Update

4 Comments Add your own

  • 1. sarabia  |  March 24, 2016 at 11:15 am

    JwBuffet, What is your take on kleeneze? I looked at the filing today it doesn’t look good.  Bought end of March with declining revenue and maybe cost issues.  Do you see that dragging down JRJR overall as a holding company? Juan

    Reply
  • 2. larry  |  March 24, 2016 at 6:18 pm

    when will earnings be posted.

    Reply
  • 3. P. Warren  |  April 6, 2016 at 12:53 pm

    So I’m wondering if the Groove people are still buyers of the stock at the current price? Does anyone know what’s going on with the Betterware situation? The last tine I talked to JRJR’s IR person I was told that the company was not expecting any problems because the process was a formality but the longer it drags out the costlier it was for the company. Could this be one reason why the earnings release is being dragged out so long.?

    Reply
    • 4. jwbuffett  |  April 22, 2016 at 12:56 am

      The Groove is made up of a group of investors who have distinct individual goals, mindsets, trading/investing habits, etc. so it would be difficult to say who is doing what at any given time. I think it is fair to say that most still have a positive long term outlook for JRJR, but also fair to say that recent events have caused some to significantly reduce their holdings in anticipation of near term downside related to the cessation of shareholder communication, delayed filings and concerns that the continued delays may be related to accounting issues.

      Reply

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