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Sankrant Sanu

 
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  • Kit Digital 10-K Is Mostly Good News [View article]
    Another factor to consider is that none of this is new information, it has been known all along. When the stock price was trading at $12 a month or so ago, all this was still there. Since then they have declared earnings that met/exceeded guidelines and had KIT resign as CEO and re-jiggered the board. The market seems more concerned with Tuzman not managing affairs than managing them, related party transactions notwithstanding. Also his interests are aligned with shareholders to the extent that he is a major shareholder who has purchased shares at prices mostly above the current price. Even assuming some of the allegations are valid (and I don't know that they are) he has little benefit in screwing the company, at least in the short-term till the stock price recovers substantially. What do you think?
    Apr 4, 2012. 05:40 AM | Likes Like |Link to Comment
  • Kit Digital 10-K Is Mostly Good News [View article]
    DrewMall, Do you have clear evidence of wrong-doing? Here is what I found for the note in the 10-K:

    On May 1, 2009, we issued a convertible interim promissory note up to a maximum of $5,000 to KIT Media, Ltd. of which we
    received gross proceeds of $2,250 in the quarter ended June 30, 2009 and $1,100 in the quarter ended September 30, 2009. Interest is
    payable monthly in arrears at 8% and matures on April 30, 2010. Interest of $51 was calculated and paid during 2009. A debt discount
    of $442 was recorded related to this debt and was amortized through the repayment date of August 18, 2009. As of August 18, 2009,
    these notes were repaid from the proceeds of the public offering.

    KIT Media, Ltd., our largest single stockholder, controlled by Kaleil Isaza Tuzman, our Chairman and Chief Executive Officer, has
    purchased $4,004 of common stock (572,000 shares) in this August 18, 2009 offering, in part through the repayment of an interim
    note payable by us in the amount of $3,350. All shares sold to KIT Media were at the same price and on the same terms as the other
    investors in this offering. Gavin Campion, our President, is also an investor in KIT Media, as are several members of our board of
    directors.

    According to this $3,350 was given in installments and repaid in stock. Currently the stock price is barely above water from the then stock price for KIT Media so it is not clear how they have made much money on this...? They are underwater on most of the other purchases and warrants as well.

    They do seem to have assembled a pretty impressive array of companies through the acquisitions and the revenue seems to be real and growing. This is what I am finally betting on despite my discomfort with some of the early transactions with all the Tuzman related companies. In any case, they will only receive much benefit from all of that if the stock price is substantially higher than today. It would be higher if they had not made all these complicated transactions so in a way they have been shooting themselves in the foot in trying to be too clever.

    In any case, my interest is more in what they do forward from here. Will their revenue and earnings grow as predicted? If so, we can still get a substantive gain from here.
    Apr 4, 2012. 05:27 AM | Likes Like |Link to Comment
  • Kit Digital 10-K Is Mostly Good News [View article]
    That's a FUD analysis. It is best to walk through each of the issues step by step. There are issues with KITD that is why the stock is at this price. I like the risk/reward ratio at this price. If it were selling at $20 or even $15 I would not be so comfortable with a long bet.

    The SEC investigation--50K shares traded in 2010... is it serious, don't know. Does it substantially change the investment thesis, not really.

    $2 million difference based on the auditors reckoning using GAAP measures. Will it matter a year from now? Probably not.

    The numbers are audited by a top US accounting firm according to GAAP. So the final numbers are GAAP numbers.

    It is hard to come to the conclusion that there is massive fraud going on based on the data. Yeah there are a lot of moving parts and things I don't like. But if there is evidence of outright fraud it will be good to bring it out. Are they claiming customers they don't have? Are the customers paying them what they say? Is the money hitting the books? If anyone has insight into real issues, like a Channel test, it would be great to know. FUD doesn't count.
    Apr 2, 2012. 08:58 PM | Likes Like |Link to Comment
  • Kit Digital 10-K Is Mostly Good News [View article]
    Note that there is about a $2 million difference in cash and net income from their original filing. They haven't explained the difference but this is probably part of the "material deficiency." I was thinking of creating a table with all these little differences but in the end it won't matter so much. They are integrating a bunch of companies and accounting system. I am glad the auditors are comfortable with the final numbers and I am more concerned with them hitting the $320 million revenue number going forward than figuring out how they found and corrected the $2 mil discrepancy looking back. What are your thoughts? Is it worth digging into this more?
    Apr 2, 2012. 05:38 PM | 1 Like Like |Link to Comment
  • Interpreting The Material Deficiency Reported In Groupon And Kit Digital Filings [View article]
    Yes, It was buried in the 10-K as well. Hard to say if it is material. The language implied it was an investigation about a small number of shares purchased in June 2010.
    Apr 2, 2012. 01:03 PM | Likes Like |Link to Comment
  • KIT Digital Management Shake-Up: Reading The Tea Leaves [View article]
    Hi Pinetrees, I am reviewing the 10K and should have something out on this by tomorrow. I think your questions on the short interest are very valid. I don't also understand how a stock could have 50%+ short interest, especially when a significant chunk is held by insiders. Perhaps someone with more expertise on the short side could weigh in.

    One possible explanation is that the company has made a lot of acquisitions with stock over the last 2 years. Most of that stock is restricted but the acquired holders probably want to hedge their long positions and have shorted in the open market to cover these.
    Apr 1, 2012. 09:18 PM | Likes Like |Link to Comment
  • Microsoft Is Undervalued By 202% [View article]
    This is really such an immature analysis. Plug in any company with a perpetual growth rate of 20% and you can come up with astronomical numbers. I wish SA would do better quality control on stuff like this.
    Apr 1, 2012. 07:04 PM | 2 Likes Like |Link to Comment
  • Avoid Netflix On Cash Flow Issues [View article]
    I don't see a problem with DVD acquisition cost being capitalized. It is an asset that gets repeatedly used till the end of its useful life, which may be several years. It is a library.

    The more interesting question is on the streaming content agreements. This would depend on the term of the agreement and the terms of payment what portion should be classified as operating vs. investing.
    Apr 1, 2012. 06:56 PM | Likes Like |Link to Comment
  • KIT Digital Management Shake-Up: Reading The Tea Leaves [View article]
    I own both. :) I see KITD has having more near-term upside and RIMM is a longer wait and see play.
    Apr 1, 2012. 08:19 AM | Likes Like |Link to Comment
  • Microsoft Is Undervalued By 202% [View article]
    I doubt that Microsoft can grow earnings at 20% every year over the next 10 years. That is highly optimistic. It is behind on tablets, on phones, on internet search, 3 of the highest growth areas in its markets. Desktop windows and apps can hardly do 20%. Most of the EPS growth in recent years has been from squeezing efficiency rather than top-line growth and you can only squeeze so much out.
    Apr 1, 2012. 08:09 AM | 4 Likes Like |Link to Comment
  • Despite The Gloom, Cash Is Still King At Research In Motion [View article]
    Look at the 2011 10-K and calculate it from the COGS on services.
    Apr 1, 2012. 06:56 AM | Likes Like |Link to Comment
  • KIT Digital Management Shake-Up: Reading The Tea Leaves [View article]
    Your guess is as good as mine. I generally don't buy or value the company based on short term speculation of buyout.
    Mar 31, 2012. 02:45 PM | Likes Like |Link to Comment
  • Despite The Gloom, Cash Is Still King At Research In Motion [View article]
    Yes, it may be a good fit for MSFT, though they have finally got a OS that is competitive with Windows Phone after years of bungling. But it may be too late for them and they would probably jettison RIMM's hardware business (which will compete with Nokia and their other partners).
    Mar 30, 2012. 03:37 PM | Likes Like |Link to Comment
  • Despite The Gloom, Cash Is Still King At Research In Motion [View article]
    A lot of people have loyalty towards their BB. It is still the biggest smartphone platform in India, for instance, which is slated to become the largest mobile market (and is already much larger than the US in number of users): http://bit.ly/HztABI
    Mar 30, 2012. 03:34 PM | Likes Like |Link to Comment
  • Despite The Gloom, Cash Is Still King At Research In Motion [View article]
    Yes, it can. But I do not see it likely given that it has a subscriber base of 77 million and growing, recurring service revenue with a gross margin of 86%. What is the scenario you see?
    Mar 30, 2012. 03:31 PM | 1 Like Like |Link to Comment
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