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Short Best Inc. Before Lockup Expires

Mar. 07, 2018 2:26 PM ETBEST Inc. (BEST)JD, ZTO11 Comments
Don Dion profile picture
Don Dion


  • When the IPO lockup period for BSTI expires on March 19th, pre-IPO shareholders and insiders will be allowed to sell large blocks of previously restricted stock.
  • Just 12.2% of outstanding shares are currently trading.
  • Significant sales of restricted stock could cause a short-term downturn in share price.

March 19, 2018, concludes the 180-day lockup period on Best Incorporated (NYSE: BSTI).

When the lockup period ends for Best Inc., its pre-IPO shareholders and insiders will finally have the chance to sell large blocks of previously-restricted stock. Just 12.2 of shares outstanding are currently freely transferable.

(Source: F-1/A)

A sudden increase in shares traded on the secondary market will likely negatively impact the stock price of Best Inc. in the short term. This group of pre-IPO shareholders and insiders is comprised of numerous individuals and 10 corporate entities.

(Source: F-1/A)

Currently BSTI trades in the $10.50 to $11 range, slightly higher than its IPO price of $10. However, this price is down significantly from its high of $12.05 on September 25, just five days after the release of the IPO.

Business Overview: Smart Supply Chain Service Provider in China

Best Inc. operates as a smart supply chain service provider in the People’s Republic of China. The company’s proprietary technology platform gives its ecosystem users the ability to operate their business with a variety of SaaS-based applications. Its applications include store management, smart warehouses, sorting line automation, swap bodies, and network and route optimization. The company also offers door-to-door integrated cross-border supply chain services such as international express, less-than-truckload, reverse logistics, fulfillment, and freight forwarding via its network, and warehouse and transportation partners. Best Inc. also operates a real-time bidding platform for sourcing truckload capacity from independent transportation providers and agents, and it offers store management services for convenience stores and last-mile B2C services like bill payment, laundry services, and parcel delivery and pick-up. Another business area includes a variety of value-added services, including customized financial services, such as equipment and fleet finance leases.

(Source: F-1/A)

Best Inc. defines its ecosystem to include merchants, franchisee partners, consumers, and transportation service providers

This article was written by

Don Dion profile picture
Don Dion is the CEO of Inland Management, a company focused on acquiring, subdividing, developing and marketing large tracts of land on the fringes of major metropolitan markets. Inland Management has sold land in all 48 contiguous states totaling billions of dollars. As CEO, Don is responsible for helping to maintain and enhance the firm’s strong financial position and identifying opportunities for growth. In addition to his role at Inland Management, Don Dion is the Chief Investment Officer of DRD Investments, LLC. Based in Naples, FL. and Williamstown, MA., DRD Investments is a family office focused on managing a long/short hedge fund, real estate, venture capital and various other financial assets for the Dion family. Don also serves as the trustee of the Dion Family Foundation, which focuses on helping individuals with tuition assistance at Catholic Institutions for grammar school, high school, and college education. The foundation also helps individuals by supporting Massachusetts General Hospital. Don is on two leadership boards and advisory committees at Massachusetts General Hospital and the Home Base Program (a partnership between Mass General and the Red Sox Foundation). He consults with Saint Dominic's Academy and serves as a trustee of Saint Michael’s College. Previously, Don was the founder and CEO of Dion Money Management, a fee-based investment advisory firm for affluent individuals, families and non-profit organizations. Founded in 1996 and based in Williamstown, MA. and Naples, FL., Dion Money Management managed approximately one billion in assets for clients in 49 states and 11 countries. While at Dion Money Management, Don was responsible for setting investment policy, creating custom portfolios, and overseeing the performance of client accounts. Don sold the firm to NYC-based Focus Financial Partners (FOCS) on September 1, 2007 and no longer manages money for other families or institutions. Don remains a shareholder of Focus Financial Partners (FOCS). Don is also the retired publisher of the Fidelity Independent Adviser family of newsletters, which provided a broad range of investor commentary on the financial markets, with a specific emphasis on mutual funds and exchange-traded funds. With nearly 100 thousand subscribers in the United States and 29 other countries, Fidelity Independent Adviser published two monthly newsletters and one weekly newsletter. The flagship publication, Fidelity Independent Adviser, was published monthly for 16 years and reached over 60,000 subscribers. In 2011 Don and his daughter Carolyn co-authored the Ultimate Guide to ETFs, available on Amazon.com. Prior to founding Dion Money Management, Don co-founded Litchfield Financial Corp. (LTCH) with Summit Partners. Don served as Chairman and CEO of Litchfield, which was listed on the Nasdaq in 1992 and acquired by Textron Corp. (TXT) in 1999. Don was also the Executive Vice President, CFO and General Counsel for Patten Corporation (BGX) from 1986 to 1988, where he played a critical role in the company’s successful initial public offering on the New York Stock Exchange. From 1983 to 1985, Don was a corporate lawyer with the Boston Law Firm of Warner and Stackpole. Before joining Warner and Stackpole, Don worked as a C.P.A. for Ernst and Young from 1979 to 1983. Don graduated with honors from Saint Michael’s College in 1976 with a B.S. degree in Economics and Business Administration. He received his J.D. from the University of Maine Law School in 1979 and his LL.M. from Boston University Law School in 1982. Don can be reached at donalddion@gmail.com

Analyst’s Disclosure: I am/we are short BSTI. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (11)

No reason to short this anymore unless it breaks all time lows
Well how did your short come out? Didn’t scare me out of any shares. With Alibaba putting another director on board, this could be taken over by them. Be careful with that short!
stockplaza profile picture
Good luck if you think any major holders like Alibaba and Softbank are going to sell any of the shares or even founders / management - this is a company destined to deliver 10x performance in years ahead! Shorting is a fool's paradise!
The industry could use some consolidating before I look to invest in Chinese logistics. China's infrastructure still has long ways to go and its holding companies like this back.
I think it’s very risky to short at current level. Those PE investors had the opportunity to sell at IPO price $10. But they didn’t. Some would exit if IPO price was 13-15. Well, It would be good to buy under 9, I believe. Four quarter finance data are very good.
Most interesting that the 4th quarter results were not included where revenues exceeded 1 billion - this company sells currently at less than 1x next years revenue - so whether the stock fluctuates much after the lockup expires is to be seen, but my bet is that it will not sell for less than 1x forward revenue for long.
My guess is that Jack Ma will buy more stock, and mutual funds etc will probably buy some blocks of stock at reasonable prices. Wealthy Asian investors will probably buy some also, IMHO. The price will fluctuate.
It is interesting that the author did not include the 4th quarter results in his writing.
Perhaps, he can tell us why.
Buy after the dip. Don’t fall for the immediate spike (caused by insiders holding shares pretending like they’re not going to dump). This company has a lot of potential
I agree on buying the dip. Put in a limit order to buy at, say, $9.5 or whatever...
buying opportunity
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