Archive for March, 2018

Remark Holdings Update – Q4 Results Tomorrow Morning

With the largest short interest in Remark company history (3.54m as of Monday afternoon’s most recent NASDAQ report) outstanding, tomorrow’s full year earnings report and conference call should be interesting. Remark management has largely been muzzled over the last few weeks leading up to this report and we will get to hear from CEO Shing Tao for the first time since the company’s initial response to the ridiculous short seller report accused him of trying to steal Kankan while also claiming that Kankan and Remark’s other businesses are “not really there” (do not exist). While the content of that report was clearly ludicrous, the effect it had on Remark’s stock price was very real and the stock still trades in a range 25-30% below the range it traded prior to the short seller report despite very significant good news in the form of the company’s most significant AI deal to date with its CP Group contract to equip over 11,000 7-Eleven shops with Kankan technology.

We expect Kankan’s results and forward guidance to be the key driver of investor sentiment. Kankan is expected to produce approximately $2.7m in Q4 revenue, pushing the full year total to $6m. We are hoping for update on the Q1 revenue trend for Kankan and expect to see sequential growth over Q4 suggestive of a growth trend that will allow the company to achieve its $30m projected revenue run rate. We are also hoping that management will provide more color on the expected revenue implications of recent deals including the 7-Eleven partnership with CP Group.

Remark’s Vegas.com business is expected to show some impact from the tourism disruption following the mass shooting incident that occurred October 1. Management previously indicated an expectation of supplier cancellations in the wake of that tragic event and an impact in the $500k range below their previous estimates. We will be interested to see if Remark’s tourism business has been able to get back on track or if there is still some lagging impact. We believe the Q1 to date trend with the tourism business will be much more important than the Q4 figures with investors focusing on management’s outlook on the company’s ability to achieve its previous guidance of $325m in gross bookings generating $65-$75m in revenue. As for the company’s other businesses including Bikini.com, IRS.com and Fanstang, we do not believe that the revenue contribution is significant enough to move the needle and we are not sure that these will be discussed on the call.

We believe that Remark in the low $7 range represents a tremendous value for both long term investors and short term traders. We cannot fathom how short sellers will be able to exit their positions without significant losses given the enormity of the outstanding short position and what we expect to be an increasing realization by investors that Remark’s Kankan business alone may be worth more than $10 per share. We believe the ever increasing disconnect between the value of Kankan’s business and Remark’s stock price may ultimately lead management to take steps that will lead to a fuller realization of the value being created there.

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March 28, 2018 at 3:31 pm 1 comment

LMFA Short Position at Record 52% of Float

After Friday’s close, LM Funding (NASDAQ: LMFA) filed an 8k announcing the departure of COO Dean Akers.  Given what the filings indicate should have been the “effecting” of the 2m+ share position to Esousa over the last couple of weeks, it appears that the “New York-based Family Office” is already starting to make their presence felt.  We believe this could be the first of many changes coming over the next few weeks and expect to get an update from the company very soon that may shed more light on the “technology-based” upgrade announced with LMFA’s debt exchange announcement last month.

Last week the NASDAQ released its short interest report showing that LM Funding  shares sold short are now at an all time company record 526,504 shares, a whopping 52% of the public float (LMFA Public Float is 1.01m shares). With the recent slowdown in daily average shares traded (for the full trading day on the report day volume was 115,101 shares), it would take more than a full week of trading with all trades being “buy to cover” transactions to zero out this short position. Of course, that would never occur because there are many beyond this community who watch LMFA for signs of life and when they see new buying emerge they will likely add to their position and more importantly, there are momentum traders who watch LMFA who would quickly pile in to take advantage of the tiny float vs. large short position that has clearly evolved over the last few weeks.

Checking with the various brokers this morning we see that there are essentially no shares available to short.  The Ameritrade/TOS/Scottrade platform has zero LMFA available for shorting, Fidelity has zero available and a 125% hard to borrow rate if they were able to locate any and Etrade offers to locate if you are willing to pay a “Hard to Borrow’ rate of 90%.  The “Goto” place to find shares available for hypothecation, ( (Interactive Brokers) could locate a total of 9.000 shares available for shorting, if you are willing to pay a 104.71% borrow rate.  The near impossibility of shorting this stock (other than intra-day naked short sales that must be covered before the close) is not that surprising given that 52% of the tiny public float is already sold short.  What is surprising is that momentum traders do not seem to have discovered this yet.

 

March 5, 2018 at 2:30 pm 2 comments


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