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MannKind, Michael Kovacocy, And Spencer Osborne

|About: MannKind Corporation (MNKD)

Perhaps someone that interacts with Michael Kovoacy can point him to this piece.  Readers and investors are not well served when analysts are in a banter such as this.  With this, I want to set some of the record straight and hopefully get to a point where readers are better served.  Michael Kovacocy and I look at this company in different ways.  That is fine.  It is healthy.  It gives readers various perspectives.

We will start with his quotes and then assess step by step.

Michael Kovacocy

MNKD (MNKD) - have received some heads up from some of my followers on this stock. I'll cut to the chase. Spencer and the hacks on the boards (Spencer isn't a hack though, he's too clever) appear to be focusing on my previous $10 by end of quarter prediction. I'd say, get over it, or focus on my double digits prediciton for next year. Wonder why no discussion on that one? Criticism is fine, it's expected, but coming from someone who was saying just four months ago that MNKD would be out of cash and in dire straits by October, clearly needs to be taken with a grain of salt. My challenge to S. O. is still out there - either stick strictly to discussing the scripts and underlying business (where he has some valid insights), or if you continue to put forth a clear negative bias regarding the share price and keep commenting on other people's targets/long views, then you need to step up your game and put out a proper valuation and price target yourself. I'm waiting. And for the record, my real price target is $40 a share. Focus on that now, that's a lot to chew on, because it represents more than a ten bagger. 

Michael Kovacocy

PS - and it should be noted that I have highlighted and commended and even shared one of S. O.'s articles, which I found very valuable. I'm fair. S. O. however made it a point of pointing me out by name and making an incorrect assertion about something I had said. I pointed out his error and asked for a retraction from him, which has never come. So in the big picture, I'm not biased and am totally open to accept and even applaud views which run somewhat contrary to my current thesis/position. The same is not true on the other side of the coin. As stated earlier, put out a price target with a view as to where fair value lies, or stick with talking purely about the underlying business and script evolution. Unless perhaps you won't put out a price target because you are doing business off the back of your Seeking Alpha pieces and are trying to make sure that you don't run afoul of the regulators. I haven't made a single dime off of what I write regarding MNKD. How much are you making S. O.? And are you just making money from Seeking Alpha, or from other sources? Putting a price target would then be a big problem for you, because of your conflicted interests?

Michael Kovacocy

And as mentioned yesterday, there is even a simpler reason why you might not give a price target or directional view on the stock. Simply because you know that if your red herring negatives crystallise, it might mean a couple dollars lower than the double digit fair value you honestly believe the stock merits. I.e. you probably know that no matter what, these shares trend north in a major way. I've got no time for people who bash a $3 stock every day but Sunday when they fully know that if their negatives hit, it might mean the shares are worth $20 instead of $30 a share, etc. Put a price target and a concrete view as to what is fair value, what is priced into the shares already (probably more negatives than you put out on a daily basis) and what isn't priced into the shares (partnerships, continued growth, market share increases, radically improvement in P&L, One Dro, etc.). Otherwise, stick to the basics and stop picking sides and directions in the share price.

Michael Kovacocy

As the price is currently just under $3, I would assume from the way you write, that your price target must be less than $3. So give it to us. It will be so fun to point to your low single digits price target when the shares are at multiples higher in the double digits. No deflection please, give us your price target and your view on the fair value. Thanks in advance.

Okay....step by step

"MNKD - have received some heads up from some of my followers on this stock. I'll cut to the chase. Spencer and the hacks on the boards (Spencer isn't a hack though, he's too clever) appear to be focusing on my previous $10 by end of quarter prediction. I'd say, get over it, or focus on my double digits prediciton for next year."

I am not focused on a $10 prediction by the end of the year.  I never thought such a projection was realistic.  That being said, the Q4 assessment included more that $10 by year end.  If I am not mistaken, he outlined the following:

  1. $10 by the end of 2017
  2. The company will hit gross revenue guidance
  3. The company will hit net revenue guidance
  4. The company will deliver 30% sequential (monthly) revenue growth

I suspect that not one of those will come to fruition.

"Wonder why no discussion on that one?"

You have established a $40 target in 2018, and then (I think) modified it to sometime between 2018 and 2020.  What would you like to discuss on that?  Looking 3 years out is not something that this company is ready for yet in my opinion.

"Criticism is fine, it's expected, but coming from someone who was saying just four months ago that MNKD would be out of cash and in dire straits by October, clearly needs to be taken with a grain of salt."

Michael.  I suggest that you go back and read.  Discussing the cash runway is valid.  Pointing out that a move needed to be made is valid. Pointing out that additional shares would be needed is valid.  Pointing out that diluition and/or negotiation with Deerfield is valid.  That is what I pointed out.  You misrepresenting what I said is not valid, and not professional.  Here is an article from September 1st.  Perhaps you should read it.

MannKind: Afrezza Sales Bring In More Dollars; FDA Label Decision On Deck

"My challenge to S. O. is still out there - either stick strictly to discussing the scripts and underlying business (where he has some valid insights), or if you continue to put forth a clear negative bias regarding the share price and keep commenting on other people's targets/long views, then you need to step up your game and put out a proper valuation and price target yourself."

I can discuss and analyze however I desire.  Let's not forget that it is YOU MICHAEL KOVACOCY that started these games.  I have simply been defending myself.  I never mentioned you at all until you started your little game.

I have outlined some thoughts on valuation via market cap.  This company needs to raise cash in Q1.  Will it raise a couple of quarters worth of cash, or will it be able to finally get enough cash to give itself a chance at effective marketing?  That question and answer have a lot to do with, in my opinion, how to value this company with a degree of accuracy that is meaningful to people.  My tracking of MannKind is currently geared much more toward those trading the equity actively.  My analysis is geared toward looking at fundamental issues and the dynamics that interplay between that and binary events.  I am not sure how much more I can step up my game.  I projected scripts, gross revenue, net revenue, and cash pretty much spot on.  The additional shares was not an unforeseen event to me, nor was negotiation with Deerfield.  I called a buy with the stock under a buck and called for taking some profit above $5.  I called a spike on label change and stated that the next binary event would bring negative pressure.

"I'm waiting."

I gave some market cap insight already in response to this latest game.

 "And for the record, my real price target is $40 a share."

Why not help out your investors.  Is that a 1 year target or 3 year target?  What Market cap do you associate with that?  $40 on 118 million shares is a much different valuation that $40 on 150 million shares.  I am glad you established a target, and I hope that you get it.

"PS - and it should be noted that I have highlighted and commended and even shared one of S. O.'s articles, which I found very valuable. I'm fair."

That was nice.  You have also stated more than once that people should ignore me.  In fact, that is how this silly game of banter got started.

"S. O. however made it a point of pointing me out by name and making an incorrect assertion about something I had said. I pointed out his error and asked for a retraction from him, which has never come."

Now, let's clear this air once and for all so that you will stop saying this.  At a point in time you stated that you were expecting 30% sequential growth.  I assumed that you were referring to quarterly growth.  You corrected me and stated you were referring to monthly.  I IMMEDIATELY ACKNOWLEDGED THIS and stated as much MULTIPLE TIMES.  Here is one links to my comments AND CORRECTIONS:

MannKind: Afrezza Scripts Remain Flat As Holiday Season Approaches

I have further stated that you were referring multiple times because you keep insinuating that I never corrected despite the fact I did.  Have you retracted the actual SLANDER you have put out there?

 "So in the big picture, I'm not biased and am totally open to accept and even applaud views which run somewhat contrary to my current thesis/position."

I am not so sure of that.  You came onto my radar when you told one of your readers to ignore me and accused me of being a short or in some way working with my "short comrades"  This all started with YOU.  I have NEVER accused you of anything.  Go back and read what you have written and understand that you put me in a position to DEFEND MYSELF.  All of the attacking is YOU.

"As stated earlier, put out a price target with a view as to where fair value lies, or stick with talking purely about the underlying business and script evolution."

Already explained.  Asked and answered.

"Unless perhaps you won't put out a price target because you are doing business off the back of your Seeking Alpha pieces and are trying to make sure that you don't run afoul of the regulators."

More SLANDER.  Tell you what.  Here is a challenge.  Put up a bet of  $100,000, $200,000, or whatever amount you desire.  You can come out here and go through my phone records, tax records, email accounts, investment accounts, computers, bank accounts and whatever you desire.  You will not find anything even close to what you are grossly and unprofessionally insinuating.  I was raised to be a person of honor and integrity.  I have a family, 2 kids, and another on the way.  I enjoy my family and would not do anything to jeopardize that.  It is SICKENING that you make such an accusation.

  "I haven't made a single dime off of what I write regarding MNKD."

That is quite fine

"How much are you making S. O.?"

You once lied and told people I make $500 per article.  You never retracted it.  Seeking Alpha payment terms are posted right on the site.  It is quite modest.  I write because I like to write.  An average per article is between $50 and $65 bucks.  Take out taxes, and it is even more modest than that.

"And are you just making money from Seeking Alpha, or from other sources?"

With regard to what I write about equities, I only make money from Seeking Alpha.  I make a living doing business unrelated to equities.  It is my hope that you were not trying to insinuate that what I write makes any money outside of what Seeking Alpha pays.  To be crystal clear, the only income from what I write is from Seeking Alpha.  That is FULLY DISCLOSED.  Please note that I have NEVER insinuated that you make anything from what you do.

 "Putting a price target would then be a big problem for you, because of your conflicted interests?"

Please do not let your imagination get the best of you.  I have NO CONFLICT OF INTEREST.  Further, I gave some valuation assessments already.  Please stop this SLANDER and stop insinuating things that are figments of your imagination.

"And as mentioned yesterday, there is even a simpler reason why you might not give a price target or directional view on the stock. Simply because you know that if your red herring negatives crystallise, it might mean a couple dollars lower than the double digit fair value you honestly believe the stock merits"

As I have stated many, many times.  My coverage is mostly geared toward active trading.  Example.  My opinion is that the next binary event is going to be some form of dilution.  That will likely mean that the stock takes a hit  MannKind will start 2018 with about $46 million in cash.  Deerfield holds a covenant that requires MannKind to finish each quarter with $25 million in cash.  Given the cash burn at MannKind, it will fall outside of compliance with that covenant at the end of Q1.  This means that the company must either raise cash, or negotiate with Deerfield (ONCE AGAIN).  Negotiations with Deerfield favor Deerfield and do not typically favor the average shareholder.  If MannKind does not raise enough cash, its ability to continue its accelerated marketing campaign diminishes.  I have stated many times that a MannKind with over a years worth of cash in its coffers is a different dynamic than one living quarter to quarter.  With enough cash, the company has a chance to attempt a meaningful effort.  Without enough cash, the company will struggle.  There is no rush to place a price target of any long term outlook when we first need to ensure that it can get through the near term in somewhat favorable terms. 

"I.e. you probably know that no matter what, these shares trend north in a major way."

I would love to see the company get to a point where it can remove enough risk to allow the shares to run and investors to prosper.

"I've got no time for people who bash a $3 stock every day but Sunday when they fully know that if their negatives hit, it might mean the shares are worth $20 instead of $30 a share, etc."

You can manage your time however you like.  I simply ask that you consider not slandering me in whatever you spend your time.  I do not bash. I offer realistic assessment based on data.  

"Put a price target and a concrete view as to what is fair value, what is priced into the shares already (probably more negatives than you put out on a daily basis) and what isn't priced into the shares (partnerships, continued growth, market share increases, radically improvement in P&L, One Dro, etc.). Otherwise, stick to the basics and stop picking sides and directions in the share price."

 Asked and answered

"As the price is currently just under $3, I would assume from the way you write, that your price target must be less than $3."

Please don't assume.  We have seen what happens when you assume.  You assumed $10 by year end.  You assumed the company would hit gross revenue guidance.  You assumed the company would hit net revenue guidance.  You assumed that the company would deliver 30%+ per month sequential increases in revenue.  You assumed there was not going top be a share authorization request.  You assumed that the positive vote on the request would deliver a short squeeze.  I think you can see why making an assumption is not good.  I think that the equity will trade down on the next binary event.  I gave outlines based on market cap up to over $1 billion.

"It will be so fun to point to your low single digits price target when the shares are at multiples higher in the double digits."

This is fun for you?  slandering me is fun for you?  I am sorry you feel that way. 

"No deflection please, give us your price target and your view on the fair value. Thanks in advance."

I do not deflect.  At this stage it would appear that you are the one defelcting.  You seem to indicate that your readers are concerned.  Your response is to bash Spencer and shift the focus (deflect).

Now to another post

Michael Kovacocy - As far as predictions go - I said back this summer that MNKD would pass through $5 (when the shares were just above $1) within a quarter. Spencer said the company would be bust by October. Now you ask yourself who was right on that call? I'm not the least bit concerned, because in the big picture I'm right, and so far, every day that the doors are open at MNKD and there hasn't been a BK, Spencer and the bashers are as wrong as wrong can be. Remember, he very clearly called the company running out of money by October, and I called a run well above $5. The shares were at $1. It is a fact. Want to talk about calls, look at that one. I have zero problem with people playing short. But I do have an issue with people who bash and misconstrue and basically take advantage of the fact that a company is on the ropes and doesn't have institutional, proper coverage (and people who are obtaining financial remuneration for said bashing). If there was proper institutional coverage on this stock, no one would care what Spencer or even what I have to say for that matter. But, the further MNKD gets from distress and the more Afrezza scripts ramp up, institutions will start covering the shares, and price discovery will become much clearer.

Point by Point:

"As far as predictions go - I said back this summer that MNKD would pass through $5 (when the shares were just above $1) within a quarter."

I called the stock a buy when the price was under a buck as well.  It is in black and white.  That seems to be a point in time when we agreed.

"Spencer said the company would be bust by October."

I have NEVER stated this and would appreciate a retraction.  I have pointed to specific instances in links above. Outlining how much cash is left and that the company MUST make a move prior to that point is not calling for the company to go bust.  It is pointing out to investors that a dilutive event is very likely on the horizon.  I have stated many, many times that this company can exist for quite some time in a hardship state.

"Now you ask yourself who was right on that call?"

I was right.  I called the buy under a buck, called the pop on the FDA label, called the retreat on a dilutive event,and called the need for more shares.  Again, this is all in black and white.  Your insistence that I was wrong is a figment of your imagination.  That figment is your incorrect assumption that I called for the company to be bust.

"I'm not the least bit concerned, because in the big picture I'm right, and so far, every day that the doors are open at MNKD and there hasn't been a BK, Spencer and the bashers are as wrong as wrong can be."

I do not bash, and as demonstrated multiple times, I never called for bankruptcy.  Can you find one instance (in context) where I called for bankrupotcy?  NO! 

 "Remember, he very clearly called the company running out of money by October, and I called a run well above $5."

Repeating a lie over and over does not make it true.  It could however influence people to believe your lie.  Once again, find one instance where I called for bankruptcy and have the courage to link the entire article.

 "The shares were at $1. It is a fact. Want to talk about calls, look at that one."

And I called it a buy at that stage. 

" I have zero problem with people playing short."

Nor do I.  However, if you are insinuating that I am playing this equity short you are DEAD WRONG

 "But I do have an issue with people who bash and misconstrue and basically take advantage of the fact that a company is on the ropes and doesn't have institutional, proper coverage (and people who are obtaining financial remuneration for said bashing)"

I do not bash and I do not misconsrue.  I do not take advantage of the fact that the company is on the ropes, I point out things that investors should be aware of regarding a company.  Whether MannKind has institutional coverage or not is not germane or material.  As for financial remuneration, it is very, very modest and does not impact how I cover the company one iota.

 "If there was proper institutional coverage on this stock, no one would care what Spencer or even what I have to say for that matter."

Perhaps.  Perhaps not

"But, the further MNKD gets from distress and the more Afrezza scripts ramp up, institutions will start covering the shares, and price discovery will become much clearer."

Perhaps.  Perhaps not.  It would appear that you are stating the company is in distress in some manner.  Are you bashing?  It would appear that you are saying that the the pricing of the equity lacks clarity.

Let's Move On.

Look Michael.  Let's stop all of the nonsense.  I tell my readers to look at any information they can, assess how good it is and consider all sides of the coin.  I feel that MannKind has a lot of challenges that give active traders the current advantage.  You see a wonderful story that will be $40 per share at some point in the future.  That is wonderful.  Perhaps there will be a point in time when the fundamental story gets to a point that such a thing is possible.

Why not have a good holiday and stop the nonsense of slander, etc.  To my knowledge your one complain of what I stated about you is that I thought your "30%+ sequential comment" was quarterly and not month.  I have made your monthly assessment crystal clear multiple times.

You have:

  • called me a basher
  • insinuated that I was calling for the company to go bankrupt
  • insinuated that I have "comrades" on the short side
  • insinuated that I am somehow being paid other money for what I write other than Seeking Alpha
  • insinuated that I have conflicts of interest
  • insinuated that I get $500 per article
  • insinuated that I did not correct the record with regard to your sequential comment
  • told people to ignore me
  • etc.

Look...I hope that you have some honor and integrity.  Perhaps some of this was brought about by each of us seeing things (replies and responses) third hand, or perhaps fourth hand.  Am I defensive?  Indeed.  I do not take kindly to folks that make the types of assertions you have put out there.  Am I capable of forgiving?  Very much so.  Were there parts of this response where I was a bit harsh?  Yes.

I do not see you as a crook.  I do not see you as a criminal.  I do not see you as having bad motives.  I do not see you as having a conflict of interest. I do not see you as a hack.  I do not see you as being in cohorts with others.  I see you as someone that analyzes equities and arrives at an opinion.  Whether I agree with that opinion or not is a sideline.  I would love to think that we could both carry on a dialogue in a respectful manner.  I will, at this stage hope that you see this, and hope that we can agree to stop nonsense and sensationalizing things.  That ball is in your court.

You have an open invitation to reach out to me via direct message here.  I would even love to chat so that we can call the past the past, and look toward a better and more professional dialogue.

I wish you and your family a Happy Holiday and a successful 2018!

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.