LMFA Update – Short Interest and the True Public Float

We have received a number of questions about the public float of LM Funding (NASDAQ: LMFA) since yesterday’s press release announcing the master exchange agreement.  LMFA exchanged its $4,741,601.40 debt for 2,676,378 shares of its common stock.  Thus, the total shares outstanding for LMFA increased from 3,300,000 to 5,976,378.  However, according to the agreement the shares issued were not registered so it appears that it did not increase the shares available to be traded day to day, or the “public float”.  The public float for LMFA remains at the 1.01 million shares that existed prior to the exchange agreement.

Of course, this number is extremely important to investors and traders because it represents how many shares are actually available to be bought and sold each day.  This takes on even more importance given the number of shares of LMFA that have been sold short, with 41-51% being reported by the Nasdaq in its last two reports.   It is quite rare to see a NASDAQ listed company with a float as small as 1.01 million and it is equally or even more unusual to see a company with nearly 50% of its public float sold short.

January 25, 2018 at 8:07 pm 1 comment

Introducing LM Funding (NASDAQ: LMFA) to the Groove Focus List


  • LMFA could rally 50% or more to pre-default levels due to conversion of all debt to equity on favorable terms.
  • Tiny public float of 1 million shares w/ 51% sold short could cause exaggerated move higher on uptick in buying interest.

Today we are announcing our new focus stock to the Groove community – LM Funding America (NASDAQ: LMFA).  LMFA is a small company whose stock has recently fallen to $1.50 per share, breaking down from the $4-$8 per share range it had traded over the last two years. LMFA’s stock price was eviscerated over the last few months when the company began to miss payments on its long term debt. The downdraft accelerated with what appeared to be year end tax loss selling that pushed the stock to historical lows. The stock has continued to trade near to those lows despite the fact that all of the company’s long term debt was converted to equity on very favorable terms over the last few weeks.

LMFA data by YCharts

With a clean balance sheet, a significantly reduced cost structure in place and a very significant vote of confidence from a notable third party investor; we would (at a minimum) expect to see LMFA’s stock trade back to a range more in line with its market cap prior to the events of default on its debt. Using LMFA’s historical trading range of $4 – $6 per share and adjusting for the additional shares issued with the debt exchange, that would put LMFA’s shares in the $2.25 – $3.35 range or 50-100% higher than its price as of yesterday’s close.

Groove participants can review our full due diligence report on LMFA by clicking here.

In summary, we believe that LMFA is significantly undervalued and that the current trading range offers a great opportunity for Groove community participants to establish a stake in a company that could offer returns of 50% or more when the stock starts to reflect the company’s improved outlook.  If any other positive developments were to surface, the jaw dropping short interest (511,000 shares or 51% of the entire public float) outstanding could become a major factor driving share prices much higher as it appears that it would not take much for a short squeeze to materialize. Regardless whether that occurs, we think LMFA is dirt cheap and Groove community participants who buy at these levels should enjoy significant upside soon.



January 24, 2018 at 4:32 pm Leave a comment

Groove Community Update – Remark Holdings

BTFD.  That is all.

January 24, 2018 at 11:12 am Leave a comment

RAVE Restaurant Group Update

Rave Restaurant Group’s (NASDAQ: RAVE) stock surged Friday, closing up 19% after rallying almost 50% in early trading on volume that was more than 20x normal volume.  This on the heels of a 10% move the prior day on 5x normal volume.  Have investors realized that RAVE appears to be back in growth mode?  With new Pie Five locations opening in Miami, New Jersey, San Francisco and Baltimore over the last few months while the stock has continued to trade at prices that suggest bankruptcy is imminent, one could argue that the stock is finally just catching up with the operational outlook.  Pie Five is growing and new CEO Scott Crane has the company at the forefront of the fast casual pizza space in terms of innovation.  In addition to opening in these many new high profile locations over the last few months, Pie Five has also been the first in the space to offer a drive through, delivery, adding sandwiches to the menu, adding a 14″ shareable pizza and adding a super healthy cauliflower pizza crust.  While it is still too early to see the revenue implications of any of these initiatives, we do believe that CEO Crane is leading a turnaround with RAVE and that the stock had not adjusted to reflect this potential. 

But was the move at the end of last week a flood of recognition from investors that things are turning around?  Probably not.  The speed and fury with which traders were piling in to RAVE stock Friday morning (so much so that the NASDAQ halted trading briefly) suggests to us that it was something else entirely. There were posts in various online forums suggesting that RAVE was about to switch its customer rewards program to a blockchain based cryptocurrency reward program similar to what Chanticleer Holdings (NASDAQ: BURG) announced last week. Prior to that announcement on January 2, BURG’s stock had been very thinly traded in a range of $1.90 – $2.60 for months. On the blockchain rewards announcement, the stock surged to over $5 per share and traded many millions of shares and it has since settled in to a trading range over $3 with much higher average daily volumes.  We think traders were looking at a thinly traded, small float, big short interest stock that was oversold and decided to buy in on the chance that it might be the next big blockchain mover.  Had the company actually announced such a deal, we would not have been surprised at all to see RAVE shares make a similar move ($5+) though it would have likely given much of that back in the same way that BURG and many of the others have done.  So if we get a Wednesday morning PR that RAVE is “going blockchain”, we think the stock will move even higher on the economics of huge demand vs. small supply.  And while the move may only be short lived, traders who bought shares below $2 will likely be rewarded handsomely in such a surge and if it plays out like the many others before it, RAVE would settle into a trading range much higher than the $1.40 – $1.50 range where this all started. And we think the company’s operational momentum already justifies a double digit percentage upgrade to that trading range.

January 16, 2018 at 12:51 pm 3 comments

Remark Holdings Hits Wall Street Radar With Record Short Interest. STVI Steady and Waiting

After the close of trading on Tuesday Remark Holdings (NASDAQ: MARK) was featured in an article in Barron’s Online’s Tech Trader Daily. The article highlighted the recent surge in Remark’s stock price and its emergence as a player in the Artificial Intelligence space, in particular with its new Fintech offerings and partnerships with some of the largest companies in China and Thailand.  This is one of the highest profile mentions of MARK to date, as the company has operated largely below Wall Street’s radar for most of its existence and has certainly never received a bullish mention as a Fintech Artificial Intelligence play by such a widely followed source as Barron’s .

Also after the close of trading yesterday, the NASDAQ short interest report indicated record short interest for MARK shares. For the first time in company history, there are over 1 million shares of MARK sold short (1,062,454). We believe this will prove to be very significant for two reasons –
1) it is very telling that the reported short interest has grown to such a level but we believe the bigger short picture is much more significant, as it is widely believed that there is a naked short interest that is much larger than what is reported by Nasdaq. Yesterday’s intraday short volume suggests more than half the volume traded yesterday involved a short sale, giving further evidence of the naked short selling that has been attempting to stall or at least slow MARK’s advance.

2) MARK management has shown a tendency to release its most significant bullish news a day or two after the NASDAQ releases the short interest data, almost as if they are attempting to punish the short sellers. With tomorrow being the last trading day of the year and MARK shares showing gains for the year that could put the company on many of the year end “top performing stocks of 2017” lists, we wonder if management might have a “grand finale” for what has been quite a fireworks show this year. Given the bullish article from Barron’s Online after yesterday’s close, the potential for bullish news to be announced tomorrow and the record number of shares that have been sold short; we would not be surprised to see shorts attempt to cover some of their exposure here and this would cause a short squeeze that will push MARK shares to new all time highs.

Snap Interactive (STVI)

We have been pleased to see Snap Interactive (STVI) continue to trade in that $6.50-$7.50 range as this allows Groove participants to establish a position while the stock is still valued at about half the multiple used to value its peers in the live video streaming / social media space and its blockchain incubator segment is not factored in at all. We believe that STVI is a below the radar blockchain/crypto play that has not been discovered by investors because it is traded on the OTCBB. As of earlier this month the company became fully compliant with the listed requirements for uplisting to the NASDAQ. We believe that will happen in the very near future and STVI’s valuation will increase markedly as the story becomes more widely known and more institutional investors have the ability to buy shares. In the meantime, the company continues to leverage its technology platform and legacy as a technology innovator to forge partnerships with best of breed blockchain start ups while we get to buy the stock at prices more in line with overlooked bulletin board stocks.

December 28, 2017 at 10:25 am Leave a comment

Groove Update – MARK & STVI

Snap Interactive (STVI) –

We received several notes over the holiday weekend asking why we chose to announce our new focus stock at 1pm on what is almost always one of the slowest trading days of the year. We originally planned to announce STVI at the end of this week. However, on Friday we saw a tremendous shift in sentiment against blockchain / crypto stocks (Crypocurrencies were in a sell off along with RIOT, OSTK, SRAX, MARA and all blockchain stocks) and since there was still a few hours left in the last trading day before Christmas, we thought we would give our community participants a little gift. With the big sell off underway in those blockchain/crypto names and what appeared to be weakness in live video streaming / social media stock generally, we thought rolling it out sooner rather than later would afford our community members a good chance to start building a position at a time when they may be able to get some shares without the stock moving up too much. Hopefully we will see some of that crypto/blockchain weakness carry over into this week so participants can still buy STVI at prices in that $6-$7.50 range before the company uplists to the Nasdaq.

Remark Holdings (MARK) –

As we prepared to send the STVI note, we got the tweet of the Coke toast pic from the Remark Holdings account and we HAD to address that. Remark’s management has been quite clever, among the best we have seen at using their Twitter account to keep investors engaged. This one may take the cake and we are looking forward to finding out what our friends in Chengdu were celebrating. While we expect to continue to see significant volatility in MARK trading, we remain confident that the stock will trade significantly higher from current levels and fully expect the stock to trade north of $12 in the near term. In the meantime holders of MARK should expect to see major price swings as institutions use every trick in the book to try to accumulate as many shares as they can for their end of year “window dressing”.

December 26, 2017 at 12:24 pm Leave a comment

Is MARK’s Kankan Doing a Deal With Coke? Also, Blockchain Incubator Snap Interactive (STVI) Is New Groove Focus Stock

Blockchain/Crypto Incubator Play Snap Interactive (STVI) Is New Focus Stock

– First publicly traded “incubator/accelerator” for blockchain start-ups
 Pending Nasdaq uplisting with all criteria satisfied as of Dec. 18
– Public float only 2.1 million shares, smallest among blockchain/crypto plays
– Crypto play from ICO deal w/ Gladius.io and more ICO partners on deck
– Launching Backchannel blockchain secured CryptoID messaging app in ’18
– 179,200 live video streaming subs can trade bitcoin for other virtual currency

Snap Interactive (STVI) is a provider of live video social networking and interactive dating applications in addition to being the first publicly traded blockchain play in the space. STVI’s product portfolio includes Paltalk, TinyChat and Camfrog which offer a collection of video based communities, FirstMet, an interactive dating brand (formerly known as Are You Interested?) and the soon to be released blockchain based Backchannel secure messaging application.

STVI is the first publicly traded company in the live video streaming / social media space to pursue an accelerator/incubator model focused on blockchain development. STVI is leveraging its legacy as a technology innovator (including 26 patents some of which are licensed to Microsoft, Sony and Activision), its significant in-house blockchain development talent and its infrastructure as a digital operator at scale to create joint development collaborations with blockchain startups.  STVI is focusing its blockchain development partnership efforts on areas related to its Social media and video streaming platform including content delivery, digital security, storage, payments and Ad tech. A good working example of this model is STVI’s deal with Gladius.io, a startup offering a blockchain based content delivery network that provides mitigation services for distributed denial-of-service (DDoS) attacks. STVI engaged with Gladius in a two way product development relationship that allowed each to use the technology throughout their own ecosystems and includes early stage ICO participation on very favorable terms. We believe STVI is in a position to cherry pick from among the best operators in each segment to gain cutting edge blockchain technology to adopt for its own platform while banking a diversified portfolio of cryptocurrencies at pre-ICO or otherwise very favorable below market prices. To see a partner’s ICO in progress, click here. We believe there will be many more of these partnerships announced over the next few months as more start-ups seek a “big brother” with the technical chops and experience to help them graduate to the next level.

STVI’s primary internal blockchain initiative is its “Backchannel” blockchain secure CryptoID messaging app that is slated to launch next year. Backchannel will be the first blockchain secured messaging app, making it more private and secure than even the most secure existing apps due to its ability to allow registrations using crypto ids. The most prevalent secure messaging apps in use today offer much greater privacy than standard messaging offerings like WhatsApp, Snapchat, etc. but they still require some information that can be traced back to an individual. We believe the technological advances in big data, artificial intelligence and facial recognition technologies and the applications being developed therefrom will push many consumers to seek greater privacy in many aspects of their lives and we believe their communications will be first and foremost, creating a huge opportunity for Backchannel.

Recent discussions with management regarding the importance of uplisting leads us to believe that the company has already filed to make the move to the Nasdaq Capital Market and it is our understanding that STVI achieved full compliance with all listing requirements as of Monday December 18. We believe that a move to the Nasdaq would do much to raise STVI’s profile with investors and increase the trading in its shares. We think the blockchain development and deals with blockchain startups will likely cause STVI to get much more attention from investors in the weeks ahead as many are increasingly seeking small companies with big potential in the blockchain/crypto space. When that occurs, we believe that the very small 2.1 million share public float available to meet the increased demand for shares will cause the stock to move much higher than its current trading range. We note that some others in the space like RIOT Blockchain (Nasdaq: RIOT) have been considered “small float” plays on the emergence of blockchain technology, but it should be noted that RIOT’s 6 million share public float is over 3x larger than STVI’s public float. STVI has the smallest public float of any publicly traded blockchain company we are aware of and we think that could be a factor driving the shares higher in the weeks and months to come. As of this writing, the stock was trading in a range between $6.50 and $7.50 per share which equates to a market cap of just over $40 million. We believe STVI’s core business is easily worth at least 2-2.5x that much based on industry comparables (see the full due diligence report here) and on the belief that its blockchain initiatives could create significant additional wealth for shareholders over the long term. In the near term, we believe a move to the Nasdaq will significantly increase the liquidity / exposure for STVI and we see the company’s cryptocurrency deals with blockchain startups attracting the kind of interest from investors that could cause the stock to move substantially and possibly exponentially higher.

Is MARK’s Kankan doing a deal with Coke?

Curious tweet from Remark’s official Twitter account today openly teasing about the crew celebrating what we are left to assume is a very big deal –

We found this most interesting considering the foreshadowing that has clearly occurred with prior tweets. Remember the tweeted video clips of the AI/facial recognition technology in action in the weeks prior to Remark’s announcement of a 7 figure contract to use that technology for the Shanghai Municipal Health Agency (China’s FDA)?  How about the virtual reality tweets in the weeks prior to the announcement of the deal with Sina Weibo to use Kankan’s AI as the core technology behind Sina’s augmented reality mobile app?  And who can forget the picture of Remark CEO Shing Tao at the “big boy table” with execs from CDH Investments and CP Group? We posted an article that day titled “Is Remark Selling a Minority Stake in Kankan” thinking that the picture was hinting in that direction. Of course, it was only a few weeks later that they announced the sale of a $10 million minority stake in Remark itself at $12 per share.

So is this tweet foreshadowing a Kankan deal with the bluest of blue chips Coca-Cola? It is widely known that Coke has invested heavily in Artificial Intelligence and Big Data –


From that article – “Coca Cola is known to have ploughed extensive research and development resources into artificial intelligence (AI) to ensure it is squeezing every drop of insight it can from the data it collects.”

Would Coke look to gain every advantage in the fastest growing consumer market in the world (China)?  If so, what would be the best way to do that?  A key argument shorts have used against MARK in trying to further the ridiculous argument that KanKan is somehow not a legitimate company because it does not have deals with big US companies.  If Kankan has a deal with Coke, that will certainly put such talk further into the ridiculous category it already occupies.  Additionally, we are confident that such a deal will push Remark shares to new highs and expose the Remark / Kankan story to a much broader cross section of the investing community.



December 22, 2017 at 3:00 pm Leave a comment

Remark’s New Fintech Deal & CP Group’s $12 Per Share Investment in MARK

Prior to the market opening yesterday Remark Holdings (Nasdaq: MARK) announced a new Kankan Fintech agreement whereby Bank of China is creating a new product that will use the KanKan social credit data platform. We view this second agreement with Bank of China as a very big deal for several reasons:

1) it validates KanKan’s social credit scoring product, an offering that we see having a very high ceiling in a market where the middle class is expanding rapidly, there are no credit rating agencies and the population is many times greater than the pool of potential borrowers in the U.S.

2) CP Group, the $45 Billion per year revenue generating conglomerate that invested $10m in Remark stock at $12 per share this week is one of the largest shareholders of Citic Bank, one of China’s largest banks and the one who just did a big joint Fintech venture with Baidu (the Google of China) to offer a direct bank called Aibank. While this second deal with Bank of China and Remark’s Joint Venture with CP Group do not together guarantee that Kankan will get a deal with Citic or Aibank, we believe it increases the likelihood of that happening significantly.

3) If Kankan’s social credit scoring product effectively reduced loan defaults for Bank of China you can be sure that the other lenders there will look to add some kind of credit scoring to their own loan offerings to lower their risk and increase profits. There is no Facebook in China, but there are several significant social media networks. The biggest are owned by Tencent and Alibaba (two of the largest companies in the world) who have a deal in place with Kankan that gives Kankan access to social data from those key networks. This data set is unique and not available to other third parties, a huge differentiator for Kankan’s credit scoring product. We see this product as offering enormous upside and likely one of the biggest reasons that we expect Kankan to significantly outperform that $30m revenue guidance for 2018.

4) Management mentioned that they expect this new product to add $4 million in revenue over and above the CY 2018 revenue guidance of $30 million for Kankan. Thus, with this announcement they are raising their Kankan revenue guidance for 2018 by almost 15%. This is another good example of the approach Remark has taken with Kankan every step of the way – under-promise and over-deliver. This is the second time they have raised their 2018 guidance for Kankan and we believe it is likely that these numbers will still prove to be quite conservative.

In summary, Remark’s announcement yesterday indicated a strong third party (Bank of China) validation of the Kankan social credit scoring service, raised Kankan’s revenue guidance substantially for 2018 and more importantly, gave investors every reason to understand that Kankan’s ceiling is well beyond what investors are able to see right now. We hope that those community participants who were buying this stock at  $2 and $3 and held on for so long will not be so quick to take those huge gains off the table because we believe there is tremendous upside from the current $8-$10 trading range.  Do not be swayed by the day to day volatility, as there is clearly a huge effort underway to accumulate MARK shares by professionals (likely hedge funds and other institutions) right now.  Given what we now know about Kankan and also what we can see from the valuations VCs are putting on similar companies in the space, Kankan may be worth a multiple of the current Remark Holdings market cap.  CP Group’s purchase of $10m worth of Remark shares at $12 each on Monday will look like a bargain in a few months.

December 20, 2017 at 1:46 pm Leave a comment

The Larger Implications of CP Group’s Investment in Remark Holdings

If CPK paid $12 per share to invest $10m, we know that the management of one of the world’s largest conglomerates believes MARK shares are worth substantially more than $12. CP Group Chairman Soopakij Chearavanont stated, “We see tremendous potential in Remark and its KanKan subsidiary, and we look forward to helping the company grow and scale in the future.” Through the partnership, CP Group will be able to deploy KanKan’s AI and Data Solutions platform across its vast businesses and investments. This extends to strategic business partners such as CITIC Group, a large, state-owned, multinational conglomerate in China; Ping-An Group, a leading provider of personal financial services in China; and ITOCHU Corp, a large Japanese general trading company. CP Group is the leading shareholder in all of them.

This deal should put to rest any suggestion that Kankan is something other than a rapidly growing star among international Artificial Intelligence plays. While Sensetime and other AI players in China have been valued at $3 Billion+, MARK CEO Shing Tao and Kankan have been busy putting deals in place with some of the largest technology (Alibaba, Tencent, Sina), retail / industrial / agricultural (CP Group), energy (ShenHua Energy) and big data (Acxiom) companies in the world. The line up of partners is stunning for a US based start up and the deal announced yesterday in particular seems to give Kankan the early lead as the “go-to” provider of AI technology for China’s largest companies. While we cannot say that Sensetime is not worth $3 billion, we believe that Kankan as a standalone business valued using the metrics from Sensetime’s fundings would equate to Kankan being worth a multiple of Remark Holdings’ current market cap of $247 million. With CP Group taking its stake at an implied market cap of $330 million, we believe there will be many other players seeking to buy a stake in this company in the near future and we believe that MARK shares will trade much higher than that $12 in the near future.

December 19, 2017 at 11:10 am Leave a comment

MARK Chosen As AI Tech Partner for $420 Billion ShenHua Energy

In a press release after the market closed yesterday it was announced that Remark Holdings has been chosen at the Artificial Intelligence technology partner for China ShenHua Energy Company. The $420 Billion market cap ShenHua that does $42 billion per year in revenue has chosen to use KanKan’s facial-recognition, gesture-recognition and tracking capabilities to accomplish the worker safety and management improvements, while KanKan’s artificial intelligence data platform will help ShenHua improve production efficiency. The partnership is a huge get for Remark’s Kankan as it represents a significant foothold for the company’s AI technologies in China’s energy space, further cementing Kankan’s status as an early leader in the race to capture market share in one of the largest energy markets in the world.

An analyst with Tailwinds Research (Carlson) published an excellent write up following his interview with Remark CEO Tao Shing yesterday afternoon, a very bullish report highlighting many factors that should help investors focus on the long term potential of Remark Holdings. With the extreme volatility that accompanies the large and growing short interest in Remark Holdings it can be easy to lose sight of the longer term picture and we agree wholeheartedly with Mr. Carlson’s take on the longer view.

The most telling takeaway from the interview was related to Kankan management bonuses as it was revealed that annual bonuses do not kick in if the company achieves the $30 million revenue figure that has drawn the attention of investors to that division’s momentum, but rather if the company achieves specific MULTIPLEs of that revenue goal. We see this as a rather STUNNING development, as we have long suspected that the company’s expectation of growing its business FOURFOLD over the next year (from $7.5m in AI revenue in 2017 revenue to $30m in AI revenue for 2018) might be setting the target TOO LOW. We now know that the bonuses for Kankan management are tied to generating much more than $30m in revenue next year. We have recently crunched the numbers using Sensetime and other AI startups’ recent fundings to determine a value for KanKan. Using the same revenue multiple applied to those other similarly situated (but lacking the high profile partners of Kankan) companies would result in a valuation of Kankan that exceeds $30 per Remark share. After the Tailwinds Research interview, we are left to consider that our revenue estimate of $30m for next year is almost certainly going to be too low.

As the Kankan story becomes better understood by the investing community, we expect to see even greater volatility as professional money managers jockey to build a holding that is big enough to move the needle. The tricks being employed in the daily trading of MARK shares are clearly evidence that this stock is under heavy accumulation. This is not surprising, as there are only 11 trading days left in the year, MARK’s smallish float makes it difficult to buy in bulk and we wonder how many fund managers would like to show a meaningful position in Remark Holdings (one of the top 20 total returns on the Nasdaq in 2017) to add a little “window dressing” to the annual report they will send out.

December 14, 2017 at 10:11 am Leave a comment

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