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The Green River Intrinsic Value fund is a relatively concentrated, long/short equity strategy. The fund seeks long-term absolute returns investing in deeply mispriced securities which are identified through a careful process of methodical fundamental research and due diligence.
  • UniPixel: What's The Deal? 14 comments
    Apr 2, 2013 8:58 AM | about stocks: UNXL

    UniPixel was down almost 20% yesterday on heavy volume, and the shorts haven't wasted any time claiming victory. So, what happened? Have the shorts finally cracked the code? Was something big unearthed about the company that caused the mini-crash? Does someone have pictures of Reed Killion sipping Mai-Tais in St. Tropez on the deck of the 315 foot yacht dubbed "UniFraud"?

    (click to enlarge)

    I don't think so. I haven't heard anything change from the short side of this story. It's the same old , same old. You know what I mean - the fraud, stealing, cheating, bungling, part-time, earth-is-flat, allegations all served up with scant or no evidence, but plenty of angry rhetoric.

    My educated guess is that this is the case of the market catching wind of an equity deal in the works. The CEO wouldn't deny a deal was possible on Cody Acree's call a few days ago, and there has been a lot of speculation about it in the days since.

    While this kind of speculation might normally tag a stock for a five to ten percent loss, UniPixel has had such an enormous run and large short interest that the price action was exaggerated. Shorts love a deal like this as it marks "open season" on UNXL shares. If word leaks out that there's a deal afoot, shorts press their bets, comfortable in the fact that they can cover in the deal and make a quick buck (if the deal is priced ten-percent in the hole for instance). Even if they don't get in on the deal, the stock would likely trade down to the execution price the next day, offering shorts another escape hatch to easy money. Day-trading longs join the shorts in the same effort.

    Yet if these traders become overzealous, and send the stock to levels that management finds unacceptable, the shorts might find themselves in a bit of a pickle. Management could always delay the deal. Given there are a number of positive catalysts coming in the not-so-distant future, it might be in shareholders' best interest to wait for some of the good news to be priced-in to the stock.

    How should we longs feel about an equity raise? This management team has thus far shown itself to be a good steward of shareholder capital. They would only raise money if they had a very good use for it. Where the money would go is not a mystery - UniPixel needs to buy equipment, and they need to buy a lot of it. We shareholders should feel very good about deploying capital to build out production since the economics of doing so are favorable. A capital raise and investment would be highly accretive to earnings-per-share over the medium and long-term for us. In fact, in this article we assumed that an equity raise would be done and allowed for it in a 15 million share count. The equity raise is needed to quickly ramp production and propel the stock to much higher levels over the medium-term.

    What does the timing of this alleged deal say to us investors? Longs would have preferred management wait until after some more good news was announced. But perhaps that good news is part of the "hook" offered to investors. I hardly think that "hook" was needed, but whatever.

    If we're right, and the company is pursuing a deal, the more important statement is that the ecosystem partner and the joint development manufacturing partner want to push production as quickly as possible. Each of these large organizations has vetted the existing manufacturing operations and understands that the technology is real, and that the manufacturing process is working. UniBoss has passed some major tests over the past weeks and months, now it's time to apply capital. These partners have vested interests in repeating the formula that UniPixel has now demonstrated, and scaling the operation as quickly as is possible.

    Disclosure: I am long UNXL.

    Stocks: UNXL
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Comments (14)
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  • netmore
    , contributor
    Comments (37) | Send Message
     
    Thank you, GRA!
    2 Apr 2013, 04:22 PM Reply Like
  • Chris Hofmann
    , contributor
    Comments (755) | Send Message
     
    Excellent article GRA. Much appreciated during these chaotic times. Prepare to be spread around the internet :)
    2 Apr 2013, 06:46 PM Reply Like
  • Green River Asset
    , contributor
    Comments (309) | Send Message
     
    Author’s reply » Thx Chris.
    3 Apr 2013, 09:01 AM Reply Like
  • Chris Hofmann
    , contributor
    Comments (755) | Send Message
     
    It is all of us that owe you the thanks.
    3 Apr 2013, 09:02 AM Reply Like
  • SamsaricSufferer
    , contributor
    Comments (54) | Send Message
     
    Why would Bernard Marren, one of the directors, gift his grandson UNXL shares if it were a fraud? If I had even a lingering doubt it was gone after I saw this SEC filling: http://1.usa.gov/105etdR

     

    If he want to give something that would grow in value, tax free, it is a perfect gift.
    2 Apr 2013, 07:47 PM Reply Like
  • kcchris
    , contributor
    Comments (56) | Send Message
     
    I think this is a great theory. I agree that it is very possible. However, it is also possible they did the secondary at $25 a share. This will be announced in the morning. Deal now or deal in a week or 2 doesn't really matter. The market will see the secondary as a big positive. The press release will likely say they have signed the ecosystem partner and the demand for uniboss is so high they need to expand production to 3.9 million units or 5 million units by year end. If the shares move to 15-16 million it means little. Increasing capacity fast is the key to everything.

     

    I believe news of an ecosystem partner, secondary and much much faster production ramp would send the stock to the $40-50 range in the near term.
    2 Apr 2013, 07:49 PM Reply Like
  • bazooooka
    , contributor
    Comments (2874) | Send Message
     
    Or maybe the stock is just over-valued a bit?
    2 Apr 2013, 07:51 PM Reply Like
  • big mountain photo
    , contributor
    Comments (20) | Send Message
     
    Thanks for this take. RK did recently mention that a secondary would only be used if it was beneficial to the shareholder. Rapidly ramping production will definitely benefit the shareholder and will really set a lot of people's minds at ease about execution. I look forward to seeing what will happen in the next several weeks and months.
    2 Apr 2013, 08:10 PM Reply Like
  • bengman007
    , contributor
    Comments (8) | Send Message
     
    Excellent...well written
    3 Apr 2013, 02:34 AM Reply Like
  • stardust0102
    , contributor
    Comments (3) | Send Message
     
    Excellent article, makes a lot of sense. OTOH the other one by a short named Zhou-Zhou-somebody which said nothing of value, just lots of gossip and cheap shots.
    3 Apr 2013, 04:28 AM Reply Like
  • patt2374
    , contributor
    Comments (568) | Send Message
     
    You are drinking the cool aid. I would be to if I was touting a company where 70% of the burn capitol was lining the senior managements pockets.
    Really what is needed here is someone with no emotional connection to UNXL to do a real investigative piece instead of pumpers and dumpers trying to out scream one another.
    5 Apr 2013, 03:35 AM Reply Like
  • Green River Asset
    , contributor
    Comments (309) | Send Message
     
    Author’s reply » Well Patt, maybe you're just that guy? I would encourage you to do the work. Anyone who does some careful due diligence will help shed light on the truth. I've exposed that truth in my articles. You should give it a shot. I'll even help you get started with some suggestions.

     

    Patt, do you know what it's like to work at a company that's going through really tough times? It's not a lot of fun. If you want to believe that junk about management enriching themselves when this company wasn't doing well, that's your business. But I can tell you that no one at this company was getting rich prior to UniBoss's success. The shorts twist the truth at every turn possible to dupe guys like you into selling stock so that they can profit.

     

    Of course most of the money that was being spent prior to UniBoss went to pay staff. This was a development stage IP company. Everything they had went into a) human capital and b) developing the technologies. Go look at other IP companies and see what management expense and legal fees are as a percentage of overall spend.

     

    We welcome the results of your investigative piece and hope to hear back from you in 6-12 months.
    5 Apr 2013, 07:24 AM Reply Like
  • patt2374
    , contributor
    Comments (568) | Send Message
     
    I Have. Both "old industry" companies being destroyed purposely from the inside because their parts where more valuable then there sum as a whole to start ups based on technology that was not really all that revolutionary and already passe when it was ready for market.
    I am not going to do your work for you but you have a fiscal and moral responsibility to do it for the public at large or get it out of fluff writing business.
    This is what makes the market economy the mess it has become today; a total lack of integrity and self policing. PT Barnum would have loved the world of IT. More snake oil salesmen then a county fair in the 1890's in West Virgina.(no offense meant to West Virgina-just had to pick a state)
    And you can always write it off as ramping up cost capital and product development investment. If you really believe in a product you will eat canned soup and noodles and put the rest into the product you are trying to get ready for market.
    5 Apr 2013, 05:17 PM Reply Like
  • Green River Asset
    , contributor
    Comments (309) | Send Message
     
    Author’s reply » I'm afraid I don't follow your comment. I'm certainly not asking you to do my work for me. I've done almost a year's worth of DD on this company and come to the conclusion that it is a very attractive investment. It was attractive at $5, but it is more so at $30 because the risk reward is more asymmetric.

     

    The company's spending patterns while in the development stage were absolutely in-line with thousands of other companies that I've seen over my career.

     

    Best of luck with your work.
    5 Apr 2013, 06:47 PM Reply Like
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