Seeking Alpha

Neil Danics

 
View as an RSS Feed
View Neil Danics' Comments BY TICKER:
Latest  |  Highest rated
  • Multiple Pending Catalysts Should Keep Investor Interest Strong For Rockwell Medical [View article]
    Last night short interest reported a big drop of 2.3 mn shares to 1.85 mn short. This shows that the bear case against RMTI was lack of cash i.e. financing overhang. Importantly this shows the shorts are not making a bet against the chances of SFP hitting the endpoint. Shorts pulling out ahead the SFP data to be released in the next few weeks is a positive.

    R&D burn has been $3 mn per month with Cruse I and Cruise II, with Cruise I done in May, Q2 R&D burn = $6 mn. Cruise II done in August, Q3 R&D burn = $3 mn, so total burn left for the Cruise trials = $9 mn. With $37.7 mn cash raised + 5.7 mn cash Q1 - $28.5 mn current liabilities = $14.9 mn net cash - $9 mn estimated remaining burn for Cruise = $5.9 mn net cash. So Rockwell is financed through to NDA.

    KERX hit a peak value of $10.00 = $720 mn market cap in 3 days after they announced they hit their endpoint in January for Zerenex. RMTI would hit $18.00 to reach same market cap. SFP has equivalent attractive market opportunity as Zerenex.

    I expect the companies that RMTI has been working on partnerships / licensing to pull the trigger shortly after good SFP results given how long RMTI has been working with them. So makes for a nice series of catalysts plus Calcitriol catalyst.

    At $4.01 RMTI is undervalued to the upside in the next few weeks. The low priced opportunity was created by the missteps that led to the financing overhang.
    Jun 12 08:31 AM | 2 Likes Like |Link to Comment
  • Kingold Jewelry: Kingold or Fools Gold? (Part 2) [View article]
    Have you contacted KGJI management to discuss your concerns before posting / distributing your research and before you took your short position?
    Aug 19 11:24 AM | Likes Like |Link to Comment
  • Exceed Company: The Beginning of the End [View article]
    Did you review your findings with EDS management to ensure the accuracy before you published this research?
    Aug 15 11:08 AM | Likes Like |Link to Comment
  • Exceed: A Real Business Trading at an Unreal Valuation [View article]
    The stock is too risky to buy here because it just doesn't make sense why they pay no dividend and let their stock price collapse to such a low value. When a situation doesn't make sense it is best to avoid.

    Cash is king, especially in this tough market $53 mn cash from the warrants is hard to walk away from. Dilution is not the issue, at this price it is accretive and dilutation to EPS is not significant, stock is cheap with or without the warrants. I have done the math, the company is better off with the extra $53 mn and extra 10 mn shares from the warrants. The bigger issue is there is no demand for the stock.

    Truth is, why do you want to buy a stock where management is not shareholder orientated? EDS business is likely good but their capital market strategy is weak so far.

    Buy the stock when they announce a dividend, until then it will be a house of pain.
    Aug 10 02:00 PM | Likes Like |Link to Comment
  • Exceed: A Real Business Trading at an Unreal Valuation [View article]
    The fact that EDS is being accused as fraud and the decline in its share price to an all time low of $4.22 is further evidence that EDS must start a $0.60 dividend (34% payout) immediately to restore fair shareholder value.

    Investors will have much more confidence in the validity of EDS’s operations if cash flow from operations is paid to them as a dividend and accordingly the commencement of a dividend is the strongest tool available to solve the problem.

    The math shows that EDS has more than ample cash and cash flow from operations to invest in its business capex plan, to pay a dividend of 30% to 35% of net income and to still maintain healthy cash balances to fund working capital needs.

    The market recognizes this and thus the market is losing confidence in EDS’s operations because it makes no sense why EDS would not start a dividend especially given its very low share price.

    At $4.22 EDS trades at its net cash per share of $4.18 (net cash increases to $4.43 with warrant exercise), and trades well below book value per share of $7.04, and at a P/E of 2.8x (assumes all warrants exercised, 2.2x P.E if no warrants exercised). This is substantially below peer multiples of 7.5x P/E who all pay a dividend of a minimum 30% of net income and all enjoy higher valuations even in this terrible market.

    $53 mn cash from the warrants would fund the dividend for next three years with overseas cash while the existing $140 mn net cash + $60 mn cash flow per annum funds the business capex and working capital. The chairman who owns 15 mn shares would be paid handsomely by a $0.60 annual dividend.

    If the company was a fraud then they would have started the dividend a long time ago to raise the cash from the warrants.

    EDS is a frustrating case of Chinese management not understanding the capital markets and the responsibility to public shareholders that gave the company $87 mn of capital in its IPO in Oct 2009. Their concern is so focused on the business that they are ignoring the real damage to shareholder value that is occurring. They need to reprioritize and take actions quickly to reverse the severe decline in shareholder value otherwise EDS will just keep trading lower.

    Hopefully they will start the dividend soon to restore shareholder value and to burn the shorts who are taking advantage of this situation.
    Aug 10 12:23 PM | Likes Like |Link to Comment
  • Asia Entertainment & Resources: Dividend and Buy Back News Suggest End of Down Trend [View article]
    Value grid gives idea of valuation. At $13.00 AERL trades at 1/2 the multiple of its peers. But market for small cap Chinese stocks is obviously tough right now. If the market can come to realize that AERL is a high quality situation then it is off to the races. It will take time but the big arrow is pointing up since investors get paid a nice dividend to wait plus the 2 mn share buy back ensures there is buying support if the market gets dislocated.

    Next event that should be good for AERL stock will be the release of June chip turnover numbers which should come out next week. In their May update AERL implied that chip turnover would have been $2 bn if it were not for some unusual loss rates. If June comes anywhere close to $2 bn then it will be a big positive as it will greatly increase the probability that guidance for 2011 is raised when Q2 results are released early August.
    Jun 29 04:16 PM | Likes Like |Link to Comment
COMMENTS STATS
6 Comments
2 Likes