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  • Arotech: A Dead Battery In Disguise - Why The Stock Is Worth No More Than $2 Per Share [View article]
    In our original article “Arotech: A Dead Battery In Disguise - Why The Stock Is Worth No More Than $2 Per Share” we highlighted several red flags and concerns that we believed would drive the stock significantly lower from its then price of $4.43. At the current price of $2.57, the stock has begun to price in some of the issues we raised. However, the shenanigans continue and investors are once again turning a blind eye.
    From a fundamental standpoint, the business continues to deteriorate. As we initially pointed out, the Defense Department is not doling out any new awards for the Training and Simulation business. We think revenues in this business are likely to decline over time. Additionally, the newly formed Power Systems group is going to have a very hard time growing. This is due to the fact that their biggest programs, GREENS and MEHPS, are not funded. It is very difficult to get additional funding in the current budget constrained environment.
    Here are some of the other shenanigans that are going on:

    1. Question: What should Arotech do if it can not book a profit?

    Answer: Change the definition of profit. In our initial report, we highlighted the $100mm in cumulative net losses management has racked up since 2002. A large portion was due to excessive executive compensation. So instead of tackling its cost structure to earn a profit, what does Arotech do? It changes the definition of profit! That’s right, Arotech now uses an adjusted EPS figure when highlighting its earnings. When the company reported Q1 earnings, the headline read “adjusted EPS of $0.03” but deep down in the footnotes GAAP EPS was -$0.02.

    2. Question: What should the company do if its stock price is lagging?

    Answer: Perhaps it should reassess its strategy, financials, cost structure, compensation program, etc… What does Arotech do? It fires its Investor Relations firm and hires a new one. Because of course, if the stock is not going up, it must be the investor relations department’s fault! This is the third IR firm in as many years. We have to give management some credit, because the stunt worked…at first. On February 11, ARTX retained the new IR firm and the stock was $2.41. The new effort drove the stock 50% higher to $3.65 (there were no material releases during that period) only to have it crater back to earth after the company reported disappointing earnings.

    3. Question: Has management suffered alongside shareholders?

    Answer: Why of course not. Despite a lengthy succession process, the former CEO structured his exit as a termination, paying himself $1.6mm in severance (3% of the market cap of the company at the time).

    4. Question: Has management learned their lesson from their prior failed acquisition strategy?

    Answer: We do not think so. The share count continues to go up while profits do not. At the end of 2013, shares outstanding were 17.1 million. On 3/31/15, shares outstanding were 24.6 million, a whopping 44% increase. Shareholders should naturally assume a commensurate rise in net income, right? Well that’s wrong! In 2013, the company earned $2.1 million on 17.1 million shares for EPS of $0.13. In 2015, Wall Street analysts expect the company to earn $2.5 million on 24.4 million shares for EPS of $0.10. So the share count went up 44% and EPS declined by 30%.
    While the stock has declined by 40% since our initial report, we still do not believe it prices in all of the risks the company faces. Aside from the company’s unique issues, we still do not believe the industry is faring well. Backlog declined from $70 million to $63 million during the recent quarter and we believe this is indicative of further contraction. Management said the word “grow” a gazillion times during its last conference call but we just find it hard to believe that it will be able to in this current climate with declining backlog.
    May 17, 2015. 08:13 PM | Likes Like |Link to Comment
  • Barrett Business Services crumbles after SEC initiates probe [View news story]
    *overhang will clear within 2 qtrs, a perfect setup with incredible risk/reward
    May 12, 2015. 11:18 PM | Likes Like |Link to Comment
  • Barrett Business Services crumbles after SEC initiates probe [View news story]
    We are buying as much stock as we can at these levels. Accounting and reserves have already been reset ultra-conservatively on a go-forward basis, trading at 9x our 2015 estimate with 25% growth. Overhang with clear within 2 qtrs. a perfect setup with incredible risk/reward.
    May 12, 2015. 11:16 PM | Likes Like |Link to Comment
  • Uni-Pixel's Commercialization Runs Into A Brick Wall [View article]
    Based on the stock's recent consistent strength, I think it's highly likely that Richard's article is largely a moot point in a relatively short time. This should get real interesting.
    Apr 16, 2015. 06:15 PM | Likes Like |Link to Comment
  • Uni-Pixel's Commercialization Runs Into A Brick Wall [View article]
    Wow, a third day of stock strength in the face of 2 short reports. If that isn't a loud-and-clear warning signal that positive news is imminent, i don't know what is.
    Apr 14, 2015. 04:58 PM | 1 Like Like |Link to Comment
  • Uni-Pixel's Commercialization Runs Into A Brick Wall [View article]
    i hear you. you wrote a good article with valid points. I'm a fundamentals guy, but just based on experience, when a stock reacts positively to short reports it's a terrible time to be short. I won't be surprised when UNXL is approaching $9 within a month on a classic short squeeze. Best of luck
    Apr 13, 2015. 03:43 PM | 4 Likes Like |Link to Comment
  • Uni-Pixel's Commercialization Runs Into A Brick Wall [View article]
    2 short reports issued on UNXL on 2 consecutive days and the stock continues to rise. If i were short I'd be covering. If UNXL hits any significant milestones/POs/yield improvements, shares will be +25% in a day, especially with sentiment as poor as it is.
    Apr 13, 2015. 03:30 PM | 5 Likes Like |Link to Comment
  • Tilson says he "significantly" increased his Lumber Liquidators short position [View news story]
    we've driven great returns doing the opposite of Tilson. He hit ratio is terrible - around 20%.
    Mar 6, 2015. 04:36 PM | 3 Likes Like |Link to Comment
  • ProFire Energy Is Unfairly Correlated With Oil Prices [View article]
    Have you had time to rethink your oil correlation conclusions?
    Feb 20, 2015. 11:42 AM | Likes Like |Link to Comment
  • Profire Energy - A Classic Pump And Dump, Sell Before You Get Burned, Stock Worth $1.00 [View article]
    Terrible Q3 - sales and margins. Q4 guidance is even worse. -17% revenue growth at the midpt. Ow!
    Feb 12, 2015. 04:53 PM | Likes Like |Link to Comment
  • QuickLogic: An Overvalued Stock In Rapid Fundamental Decline [View article]
    Game over. Thanks for playing.
    Feb 4, 2015. 10:35 PM | 1 Like Like |Link to Comment
  • Bulk commodity rates fall to 30-year lows [View news story]
    why on earth would GSL be a "related ticker" for The Baltic Dry Index!? It has no relation to drybulk and is a container shipping company. In fact, container shipping rates have been steadily rising for several months.
    Jan 30, 2015. 03:06 PM | 4 Likes Like |Link to Comment
  • ImageWare Systems - The Pinocchio Of Small Caps [View article]
    prepare for imminent capital raise and a <$1.50 stock
    Jan 23, 2015. 11:01 AM | Likes Like |Link to Comment
  • Growlife - It's All Smoke And Mirrors: Research Uncovers Why Shares Are Overhyped And Overvalued [View article]
    $0.03 Price Target achieved. Pop the champagne!
    Dec 16, 2014. 05:02 PM | 3 Likes Like |Link to Comment
  • Profire Energy - A Classic Pump And Dump, Sell Before You Get Burned, Stock Worth $1.00 [View article]
    excuses excuses
    Dec 11, 2014. 10:45 AM | Likes Like |Link to Comment
COMMENTS STATS
258 Comments
364 Likes