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Gerald Klein
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Forty year career in finance and executive management beginning on Coopers & Lybrand audit staff (CPA) culminating with twenty-six years as CEO of publicly-held companies. Prior to that and after leaving C&L served in CFO and COO capacities, all in publicly-held companies. Was an EDGAR... More
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  • Simply Kandi Technologies Group, Inc. (KNDI)

    Leonardo Da Vinci said it best,

    Simplicity is the ultimate sophistication.

    Last week I visited a Tesla Motors showroom for the first time in La Jolla, CA. What an experience. I was stunned by the simplicity and elegance of the Tesla Model S. Within minutes I understood Tesla's hype, valuation, and saw a future of electric vehicles for personal transportation. If you have not visited a Tesla showroom I urge you to do it soon.

    Another electric vehicle, EV, company that has intrigued me for several years is Kandi Technologies Group KNDI. It's a China-based EV manufacturer that is evolving a new intra-city personal transportation system in the world's largest consumer market. KNDI has a market cap of less than a billion, about one-fortieth of TSLA. However, KNDI is perfectly positioned, skillfully managed, and poised to achieve worldwide leadership in the production and sale of EVs.

    Kandi's elegant car-share business model simply works. Battery type doesn't matter - lithium-ion, graphene, fuel cell, or whatever comes next. The best energy solution will prevail. Plug-in or battery swap? Kandi does both. Do you need two seats, four, seven, a van or a box truck? Kandi has them all. Do you need the car for a couple hours, days, months, longer? Any time period you need is available. Kandi takes care of battery charging and maintenance, the transaction can be done in person, by phone, or app, and be paid for by Alipay. Do you prefer to drive or a self-driven car? Someday it's your choice. Kandi's transportation system is designed for life in urban China today and the future.

    To date Kandi lacks analyst coverage and has been beleaguered by shorts since its inception as a U.S. traded public company simply because it became public as a reverse merger. The most notable short has been Mark Cuban and his sharesleuth.com. On several occasions Cuban told me KNDI is a fraud and its management crooks. Meanwhile, earlier this month the SEC issued a no action letter to KNDI regarding an investigation begun in November 2013, I suspect prompted by Cuban or his henchman.

    SEC investigations are significant. They are costly and time-consuming and almost always used by shorts to create disinformation, misinformation, or even mendacity to move the price of a stock lower. It's the practice known as short and distort, and for reasons beyond my simple comprehension it's commonly practiced with impunity. On November 1, 2013 KNDI short interest was 4 million shares. A year later its short interest stood at 7.9 million shares, almost double. At the end of last month it was 7.2 million shares, roughly 24% of the float.

    SEC no action letters are significant too. An SEC investigation typically requires an examination of all the Company's filings, especially registration statements. A search of KNDI EDGAR filings at sec.gov reveals seven S-3 Registration Statements beginning November 19, 2009. Additionally, since inception as a public company, KNDI has filed seven Annual Reports on Form 10-K and twenty-one Quarterly Reports on Form 10-Q. Simply put, that's a prodigious amount of scrutiny to yield an SEC no action letter.

    Granted, there are few people like Elon Musk of Tesla, SpaceX, PayPal, Zip2, and Chairman of Solar City. Kandi Chairman and CEO, Xiaoming Hu, may lack the charisma and entrepreneurial flair of Musk but he does not lack the scientific and engineering brilliance, business acumen, and intense focus to execute his vision of creating the most elegant personal transportation system for his fellow citizens. A personal transportation system so elegant that I believe can only be surpassed someday by "Beam me up, Scotty."

    Xiaoming Hu said it best too regarding the SEC's no action letter, "… Kandi's management's primary interests have always been twofold -- shareholder protection and building a solid foundation for the continued long term growth of the Company. We will continue to pursue those goals with transparency and in compliance with all applicable laws and regulations."

    Simply well said.

    Feb 20 8:20 PM | Link | 4 Comments
  • Kandi Technologies Group - A Short Conundrum...?

    I found a recent article by Frances Forte, "KNDI Top Growth & Short-Squeeze Prospect for 2015", regarding KNDI's improving fundamentals very informative and compelling. Further examination of the macro issues supporting KNDI's business model portends a rising stock price and breakout financial performance in 2015. Especially when considering the pent-up demand for mandated EV adoption compliance by the end of 2015, and the new Five Year Plan commencing 2016 through 2020 when five million EV's must be in use.

    One has to question the basis of the short thesis regarding the 7.6 million share short interest in KNDI. I suspect Todd Krajniak hit the nail on the head in an article he published in July 2014, "Kandi Technologies Group - What "THEY" Are Hiding" where he postulates some institutional short chose to defend a relatively modest 750K short interest at the end of May, 2013 and now finds its short interest at 23.3% of the float.

    Improving fundamentals, declining volume, a rising short interest - one would suspect at some point something has to give.

    Tags: KNDI
    Jan 20 5:29 PM | Link | 1 Comment
  • The Kandi Technologies Short

    Kandi Technologies Group, Inc. (NASDAQ:KNDI) shareholders can expect the KNDI short to work overtime. There remains no alternative. On Monday, November 10, 2014, following the announcement of another strong quarter,,we witnessed a concerted short attack to spread fear, uncertainty, doubt, and despair hoping to create widespread panic.

    The same tactic was invoked today, November 12, 2014, during KNDI's meeting with investors and analysts in San Francisco. Yesterday the uptick rule was in effect and the short could not attack the bid like it's done on days when the uptick rule is not in effect, like today. The goal is to make positive developments appear negative, create FUDD (fear, uncertainty, doubt, and despair.) Oddly enough, FUDD smells like desperation.

    Every KNDI shareholder should expect these tactics to continue because 'the short' has no alternative. He cannot cover his short position. His fate was sealed June 5, 2013 when he chose to defend a short position of about 700,000 shares when KNDI broke out to a new all time high. Since then 'the short' has battled to defend that short position which now stands at almost 8 million shares. Meanwhile KNDI trades around $15 and will trade higher.

    From inception in August 2007 thru June 3, 2013, KNDI traded 169,588,474 shares over 1,451 trading days for an average daily trading volume of 116,877 shares. The float during this period was about 19 million shares.

    From June 4, 2013 thru November 11, 2014, KNDI traded 892,863,538 shares over 365 trading days for an average daily trading volume of 2,446,201 shares. The float during this period averaged about 30 million shares.

    So why did the daily average trading volume increase over 21 times since June 4, 2013 while the float increased less than forty percent?

    Todd Krajniak provides the answer in his article, "What Are They Hiding". What "they" are hiding are the days to cover. The days to cover is not 5.03 days as reported by the most recent NASDAQ short interest report. The days to cover is likely 50, 60, 70, or even 100 days. No short on earth, or in hell, wants it known the days to cover is 50, 60, 70, or 100 days.

    It's likely 95% of KNDI's daily average trading volume since June 5, 2013 is empty volume created simply to hide the REAL days to cover.

    Rest assured, the KNDI short will not go easy. He'll only go after the following events occur in combination:

    1. Breakout financial results, let's say KNDI's first $100 million revenue quarter.
    2. Forward looking information.
    3. Top-tier analyst coverage.
    4. Institutional ownership approaching 50% or more.

    All this will happen in due time, maybe sooner than we expect. In the meantime we can expect the KNDI short to grow more and more desperate to create FUDD - fear, uncertainty, doubt, and despair hoping to invoke widespread panic.

    Meanwhile, I'm enjoying the ride… I hope are too!

    Tags: KNDI
    Nov 12 9:38 AM | Link | 3 Comments
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