Nicu Mihalache

Nicu Mihalache
Contributor since: 2011
Yes, I never had any meaningful amount of shares in TSLA, but had 900 options expired in Jan, 350 in March and took out something like $150-200k in cash during the squeeze from the 55 options I had left. Should the short squeeze I was waiting for and playing for 2 years had arrived 3-4 months before that, it would have been about $4+M in cash, my strategy would have been the same (and yes, I wanted to continue my option strategy and get new calls to replace expired ones, but I had margin calls because of AAPL so I had my hands tied at the back and my head underwater). That is all history now, as much as the Axion story. Only future and experience matter at any point in time.
I have cashed TSLA call spreads on the way up and ended with $130 calls that were expiring in July so I sold the last of them a few days before expiration. Which does not amount to any dumping TSLA, those calls would have expired or I could do what I did, take the last bit of juice out of them. Tesla went even higher afterwards and I never touched it since, not with calls, puts nor shares long or short. I think it is profoundly overvalued now, however not more than AMZN.
I took out a bit over $50+k in cash and took a dear friend out of debt. About $120-140k was multiplied by a factor of about 5 with AAPL options and a bit over a third of that was lost with Axion. Mostly because of a crazy warrants provision signed at the last minute, that was not present when I have signed on the dotted line (last Oct financing + upgrade to NASDAQ). Axion had one CEO resigning for serious health reasons and another one died unexpectedly about 8 months later (I had him over the phone Friday evening and he sounded in good shape and pretty optimistic, then he died Sunday morning, about 36h after our 40 minutes or so conversation). B warrants completely destroyed the stock and their hopes of any new reasonable financing.
So yes, I think you approximatively know some things, but not much. Just what I said in the beginning.
Thank you Leigh for your kind words.
You just have to love people who speak for others without much knowledge. JRP3 is no better than the average.
If you check my article history, I have noticed a bit too much ahead of its time the possibility of a short squeeze in TSLA. I have played this with options. While most of them expired in Jan and March just before the short squeeze that started in April. I still had enough of them calls to get me out of the hole I dug myself in with AAPL calls the previous year.
I have since took out of the market more than all the cash I had put in. And the remaining cash from TSLA calls (I had no shares) was put to work in AAPL with something like 5x in 1.5 years and a decline since then + some serious loss with AXPW (that is another story).
All in all, still playing the market hard (AAPL options and some IPOs). While down for the last 12 months, still bullish on AAPL. I hope the next bull ride will arrive while most of my calls are still in existence, but timing the market is more of an illusion than a science.
I have stopped writing articles exactly because I was so wrong with the timing wrt AAPL and I was afraid that some people who noticed my good performance on other sides of my articles may lose money because of it too.
iPhone is now more or less where I predicted it should be by now, around 250m / year. iPad did not grow as I thought, but I think it is just about timing again, meaning that the curve is not linear nor exponential. People need time to learn and iPads do not wear out of fall out of fashion so quickly as iPhone. iPad will start growing nicely again.
I have weighted if I should start writing again about AAPL. But maybe I should stop to one prediction for now: as Q4 earnings do not matter so much, I will predict that guidance for Q1 (Dec quarter) will be for revenue in the $75B - $80B and that should resurrect a bit the bulls. Be aware that I own a boatload of calls and that may be only my rose colored glasses talking !
Cheers,
Nicu
Yes WO, is is just feelings that you have to get off your chest.
The minute you buy your first shares, even in a megacap, you are swimming with sharks, snakes, crocodiles and piranha, the only difference is that you are not aware of it in the beginning.
Maxim is not out there to get you, only their 10% of the cash collected in the PO and hopefully 10% or so from future POs. So they have all the reasons to make you win big with every deal so you can participate in further deals and recommend them to friends and partners.
I was just reading Taleb yesterday: in order for the ecosystem to thrive (be antifragile), individuals have to have a high rate of failure (be fragile). That applies to both investors and businesses in the economy, we and Axion may simply be one of those who have to disappear. As heartless as it seems, this is how things work.
We (some, maybe most here?) believe that AXPW is quite undervalued and that there is a good chance that the company will make it. Maxim if simply improving our chances for hefty returns, should Axion succeed. That is what they do. They do not take sides nor care much about feelings, except making those who have opened their wallet happy for recurring business.
The machine does care about your feeling only if it can take advantage of them, they are your enemy in this game.
Randy, a nice short and realistic article. Thank you.
But mind you, once you pronounce any non-superlative words in the same sentence as Tesla, hordes of zealots will be out there full of mouth foam ready to get you ;)
The human mind works in mysterious ways, but the results are foreseeable most of the time ...
EI, "From a purely self serving standpoint, I would much rather have the terms of the old S-1, so that I can get more of the company for cheaper, as I am hoping to build out my full position in the company during this offering, should I get my full allotment of shares."
Nope, if you can get close to as many shares as you ask for, the present deal is 50+% better (+ because 5-year warrants are at 100% of the price, not 120% as before and 1-year warrants are below price). Because today, you get 3 units for the price of 1, instead of 2 for the price of 1. You don't have to have the cash now for the 1-year warrants. Either you raise the cash in one year, or (if they are above $3) you can make an exercise + sell order, so you recover the price premium without extra cash involved.
PY:
"If I am not mistaken, this will ensure the gamers don't get to participate as easily. Fewer dollars available, means less chance that you will be issued the offering. Am I wrong? Is this a big set back to those who sold, thinking they would be able to buy back in?"
YESSS, a Huge YES !!!
"Too bad Wall Street doesn't see it like that."
Wall Street does not trade OTC penny stocks. So the jury is still out deliberating.
Wow, I really do not want to post copies of my comments, but I am very tempted to copy / paste my answer to gg1 above.
Just to point out two fantasies from your comment:
• "therefore they have moved the price to that point which I suspect is approx. $3.00" - this is actually an accusation of Maxim doing illegal stuff; I don't think they'll bother, but you could lose your shirt if they came after you
• "I don't fall for the line that TG demanded axionistas be included" - there have been reports from independent trustworthy sources of that; you're trying to appear smart but the result in the exact opposite of that
That's the point. It's not recurring revenue ;)
It's a one off lucky shot and the "smart" guys doing that will spend months searching for the next $250 jackpot.
Many times I make $50+k the minute the market opens without moving a finger. Does it mean I can make that kind of money every minute eight hours a day, 250 days a year (with no comparable or larger losses in between)?
RA, how many times per year do you get those $250 for a few clicks?
Maya, don't feel sorry for anybody. It's just a huge machinery and this is far from the worst thing that can happen to us Axion shareholders. What is done is done, and keep bringing up the unimportant things may do more harm than the unimportant things themselves.
What are you trying to accomplish btw? Condemns the errors of the past? You have already done that in 2013. Enough is enough.
Maya, I never wished you ill, on the contrary.
I know very well you have put a lot of effort, cash and took risks with Axion. That was not the point.
I also understand why you have posted about those gifted shares, but I think it is a small detail in the large picture. Do you really think those who gamed the system will get rich about it? They will simply be giddy for being good at cheating. This is so common in this world, we should not even talk about it. Karma generally catches them, mainly in the form of twisting their minds to do only small things like that all their lives.
Same goes for those who sell AXPW(D) so that they can participate in the offer. If my guts is even half right, they will get close to nothing in the deal.
The point of my message is the following. Given the current situation, many long time and even large Axion investors are "au bout des nerfs" and some bits flip randomly in their DRAM. When people are under high stress, one reaction is to find a leader to follow without much questioning. Especially given your "founder" and "bull legend" status, on top of "wise seller", you get a version of a fan club here (and copy now a decision you made in a different context, clearly better than to sell now).
To have them sell now will simply confirm my "prophecy"
http://seekingalpha.co...
(just a guess really, backed by some statistical evidence) that many will sell out at the bottom, just to see the Montgolfier take off (yes, I'm changing a bit my tune from the train metaphor). That would be doubly bad, for them and for Axion.
Yes, warrants are a fabulous sweetener and quite a bit of drag (read dilution in 5 years) for existing stockholders. I'm in both camps.
If they do not allocate me all the shares I want and AXPWW will trade below $1, I might just use a nice chunk of the remaining cash to buy warrants.
"Nicu, If I can only get what the market will bear for the warrant then why should I even care what the STRIKE is?"
If your shoe seller only gives you what he wants in exchange for your $ bills, what do you even care how many zeros are written on those pieces of paper?
A number on a contract that gives you a right (or obligation) makes all the difference.
Assume you have 1000 shares of Axion and they sell for $3.50 each today.
A. How much money do you want from me now so that you forfeit your right to sell them above $4.20 for five years? In the mean time, I can reclaim your shares any time I want and give you $4200 in exchange.
B. Now assume that you do not have the cash to buy another 1000 shares but you really, really, really believe only the sky is the limit for the next five years. How much would you pay me now for the right to "steal" 1000 shares from my account, at any time you want during the next five years, in exchange of $4200?
Now average the A and B, divide by 1000 and you know the approximative value of AXPWW if AXPW stays at $3.50 for another week.
BTW, $4.20 is the magic number that is 120% of $3.50.
Maya, I'm glad you sold out your position. Because I think you are a proud folk and will keep away from this board and not come back with your no skin in the game teachings.
I am also glad for you that have liquidated your position at a multiple of today's price (15 months ago or so). But being defensive and getting lucky doesn't make you a wise man (which you may very well be, but not for this reason, far from it).
Masi, for the last time: Maxim told you the STRIKE of the warrants will be at 120%, not their value. The value is what buyers and sellers will agree to after a strong game of arm twisting. But if you participate in the offer, you will get one for FREE with any share you buy. Like those Android phones, buy one, get one free ;)
The only thing that will always be true, is that warrants will always worth more than pps - strike. All other parameters are volatile so to speak.
EI, this is generally a very good explanation. But there is an error towards the end. When there is (almost) no time value, the warrant will trade at pps - strike. Say AXPW trades for $33.60, warrant with strike $3.60 (just an example of 120% of $3 offering), then AXPWW will trade just above $30.
Also my guess of 10%-30%, as EI says, depends greatly of what the market "feels" its intrinsic volatility is. Try for example
http://bit.ly/1vnSi1y
If I input 30% volatility (as it was historically the case for AAPL, a somewhat volatile mega-cap), you get a theoretical value for AXPWW (in the example above) of 61c. Change volatility to 50%, un understatement for AXPW, and you get AXPWW at $1.12.
You just cannot predict Black Swans. There may still be one, the future hasn't changed so we'll just have to wait and see ;)
OR, sometimes under uncertainty, you just follow the money and have your answer.
Maxim is a "private wealth management" firm, they can only survive and make money if they offer good deals (in general) to their clients who are clearly not there for low fees and good online tools (there are none for trading, you just call them).
Once you know what their interest is, you have to ask yourself if they are good professionals. I think they are.
I have spent quite some time with Nicholas Hall over the phone and we'll do so again early next week. I am moving 34k shares with them. I told him why I want to invest such a large amount despite my relatively low net worth and stable revenue. I have told him that I am ready to bid up the offer and sign that I will not sell my shares (even old ones) for a long period. I hope he believes me (because I'm not playing games here) and he will fight for me to get close to as many shares as I ask for.
So, yes, it's not an exact science, that's why they employ highly skilled and experienced people, otherwise a smart web server would do the job. And when you do not have enough info, you just think what is the worst case and if it doesn't kill you, you go with your best guess, also called guts.
"Nicu: And how would they do that?"
Because this is a public deal and they attach their name to the success of this deal for their clients (so they are confident that we, the clients, will make a nice profit in the long(isn) term and that Axion, their partner, will also profit from the deal).
That's why we and Axion pay them 10% of the money invested, so they do a deep work both on Axion (for us) and filter out the new investors (both for us and for Axion's sake).
Half or slightly better of the energy will be recovered in a round-trip. The remaining is going to cyclicly warm and cool the salt walls. But it may beat the PbC on cycle life ...
John, I think the warrant will sell somewhere in the range 10-25% of the share price (if it stays flat) - which is not modest at all, especially for an item you get for free.
Once the share grows above the strike, the price gain of warrants will accelerate and be comparable to the price gain of shares once the pps doubles or so.
No, you are simply not familiar with the language and how options work (also called leaps or warrants depending on their vesting time).
Ranma, nope. See my comment above. You will pay less for one share and one warrant than you pay for a share out there now. The real problem is how you get allocated enough of them in the offer - that's what I'm fighting for for the last months or so!
Guys, warrants are offered for free with each share acquired in the offering. Shares in turn, will be offered at or below the closing price (one or two days before the deal is announced).
The strike of the warrant, not their value, will be 120% of the offering price of the shares (meaning that if AXPW will not gain 20% or more in five years, there will be no dilution and warrants will expire worthless; if it does, there will be dilution as large as the present deal exactly five years minus "one minute" from the deal and some extra cash $12M * 1.2 = $14.4M).
Those warrants will gain value immediately after the deal closes, as they will trade as AXPWW (looks at any random stock on Nasdaq and the price of call options one or two years out with strike 20% above the pps - extend it to five years to see what the value of warrants may be when divided by pps). So an extreme flipper could either sell the shares or the warrants or both and make some 10-30% profit the day after the offer. I hope Maxim will filter out that kind of "investor".
The only unknowns are the exact date ant the exact price. Everything else is set in stone.
Guys, don't spoil my sweet game please!
If you bid it up, I will get less leverage from the offering :D (I'm trying to double the amount of shares I have - haven't sold any of my 36.8k shares, triple if one counts the leverage from warrants)
We have left it fall for years, what are a few more days among friends?
RDC, I do not understand your phobia with Maxim. The deal they did last year was totally different. If you still want to invest in Axion, there is no better deal out there than getting both shares and warrants. Even if you do not want to put more money in, learning about the offering and what they think of Axion, can be valuable.
I any case, hey will treat you nicely.
You need a cool head, not tripes, to invest successfully!
HTL, "genius is a rising market"
As for me, when I was a child I was fantasising about becoming one. Now I see it doesn't mater all that much and it takes too much sacrifice to become a "genius" in some field (as it is 99% work), some call them experts.
So I choose to try to learn as much as I can every day, even from mundane facts (it's becoming harder and harder to filter garbage in this concentrator, for example) in many different directions and enjoy life ;)