A short analysis of Kalobios Pharmaceuticals $KBIO liquidation value

Disclosure: I am short KBIO and I intend to actively trade the stock after this post is published. See full disclaimer below.

Here is my back of the envelope calculation of the value of Kalobios Pharmaceuticals (KBIO). This was first posted in the TimAlerts chat, where I am and have been a moderator for years.

Nov 16, 2:37 PM MichaelGoode okay here is my analysis of KBIO — using very optimistic assumptions (as a short, to make the analysis more conservative for shorting): $10m in net quick assets as of June 30th. Assume cash [burn] until today equal to same rate as last quarter. […] They burned $5.8m in Q2. So that is $1.93m per month. Four full months since then and one half month so estimated cash burn of $8.7m. Even assuming no extra shutdown expenses that would leave them with $1.3m to distribute to shareholder

Nov 16, 2:37 PM MichaelGoode KBIO With 4.12m shares outstanding that equates to a liquidation value per share of $0.32 per share

Nov 16, 2:39 PM MichaelGoode KBIO caveats — this assumes no costs after today, no fees to the liquidator and no severance fees to employees. However, this also assumes the same compensation expense each month up until now and the company has laid off workers prior to today

Nov 16, 2:43 PM MichaelGoode KBIO and another caveat (this is negative for the stock) – the PR Friday mentions “As a part of its wind down and handing over management of the wind down to The Brenner Group, the company expects to phase out the remaining employees over the next thirty to sixty days.” — so there will be significant compensation expense over the next two months (no clue how large).

I looked up the company’s restructuring / termination expenses and at least for the first series of layoffs:

The Company expects to substantially complete the restructuring efforts in, and related charges will be incurred through, the fourth quarter of 2015. The Company estimates that it will incur total restructuring charges consisting of cash expenses for one-time termination benefits of between $400,000 and $500,000.

The above is from the November 9th 8-K filing. It would be reasonable to estimate another $300,000 in one-time payments to the remainder of the workforce.

I welcome feedback on my analysis. The relevant news can be found here:

Kalobios to wind down operations (November 13)
KaloBios to Reduce Workforce, Explore Strategic Alternatives (November 5)
10-Q for quarter ended June 30th

 

Disclaimer: I am short KBIO and I intend to trade this stock frequently after this is posted. I have a close business relationship with Tim Sykes (see Terms of Use for details). I have no relationship with any other parties mentioned above. This blog has a terms of use that is incorporated by reference into this post; you can find all my disclaimers and disclosures there as well.

 

 

 

 

 

Anavex Life Sciences $AVXL and the Lincoln Park ATM

Notice: This post has been corrected as of 7pm 2015-10-28 — originally I averaged the past 20 trading day closing prices, rather than the past 10 days. I am sorry for the error.

There is a lot of confusion about how the $50 million funding commitment from Lincoln Park Capital Fund LLC to Anavex Life Scienes (AVXL), and whether this funding is good or bad. To see all the details on the funding, look at the S-3 filing by AVXL to register the shares they will issue. The most important part of the agreement is below:

Under the Purchase Agreement, on any business day selected by us, we may direct Lincoln Park to purchase 50,000 shares of our Common Stock on any such business day. On any day that the closing sale price of our common stock is not below $7.00 the purchase amount may be increased, at our sole discretion, to up to75,000 shares of our common stock per purchase; on any day that the closing sale price of our common stock is not below $9.00 the purchase amount may be increased, at our sole discretion, to up to 100,000 shares of our common stock per purchase and on any day that the closing sale price of our common stock is not below $11.00 the purchase amount may be increased, at our sole discretion, to up to 125,000 shares of our common stock per purchase and on any day that the closing sale price of our common stock is not below $13.00 the purchase amount may be increased, at our sole discretion, to up to 150,000 shares of our common stock per purchase. Such purchases are hereinafter referred to as “Regular Purchases”. In no event shall Lincoln Park purchase more than $2,000,000 worth of our common stock pursuant to a Regular Purchase on any single business day. The purchase price per share for each such Regular Purchase will be equal to the lower of:

  • the lowest sale price for our common stock on the purchase date of such shares; or
  • the arithmetic average of the three lowest closing sale prices for our common stock during the 10 consecutive business days ending on the business day immediately preceding the purchase date of such shares.

So while Anavex can decide when and how many shares to force Lincoln Park to buy (up to certain maximum amounts depending on the stock price), the shares come at a price determined by a preexisting formula. What would happen if Anavex were to sell shares to Lincoln Park today? The first price would be $8.72 (today’s low). The closing price for AVXL over the past 10 trading days are as follows:

9.10
8.37
7.65
7.87
8.94
9.02
9.14
8.98
8.40
8.49

The three lowest closing prices are $7.65, $7.87, and $8.37. The average of these prices is $5.71. This is lower than today’s low so Lincoln Park would get the shares $7.96, a 20.4% discount to the current price of $10.00. In other words, Lincoln Park would easily make lots of money selling these shares the next day with essentially no risk.

But what if the stock price is not rising? Let’s assume that the last 10 trading days were all the same and that today had the lowest prices of all of the last 10 days. So I look up the prices on October 23rd and see the low was $6.51. Assuming that day happened today, Lincoln Park would get the shares at $6.51 (and the stock closed that day at $7.65). This is a 14.9% discount to the close and would allow Lincoln Park to again make easy, low risk money by selling the next day. The worst case scenario would be for AVXL stock to slowly fall with little range, in which case Lincoln Park would be able to purchase shares at a small discount to the closing price and likely break even. If the stock has been going up or been going sideways while having a wide range they get stock at such a discount as to almost guarantee a profit.

Disclaimer: No position in any stock mentioned although I will likely trade AVXL after this post is published and I will not update this disclaimer when I do that. I have no relationship with any parties mentioned above. This blog has a terms of use that is incorporated by reference into this post; you can find all my disclaimers and disclosures there as well.

 

A Short blog post of much importance

If you come across a bear and decide to run, what matters is that you run faster than the slowest person you are with, not that you be able to outrun everyone you are with or outrun the bear. This same sort of logic applies to trading, too. You don’t need to be the smartest (or fastest) trader around, just smarter (of faster) than enough people with enough buying power to move stocks.

 

Disclosure: This blog has a terms of use that is incorporated by reference into this post; you can find all my disclaimers and disclosures there as well.

What is your edge: Real estate edition

As a hobby I dabble in real estate. It is quite different than day-trading stocks in many respects but it shares some important characteristics, the most important of which is that to consistently make money you need to have some edge. I wrote about the importance of having an edge in my classic blog post So You want to be a trader? The potential edges you can have in real estate are similar to the potential edges in trading. Here are the most important:

  1. Be able to buy when others are not able or willing to buy.
  2. Know what others don’t know
  3. Have some special skill or combination of skills that others don’t have

The key to making money in real estate is to buy low — every other way you can make money in real estate is a lot harder. Over the last 8 years it has been possible to buy lots of houses / condos at distressed prices from banks that just wanted to get rid of the properties. To buy many of these properties, you need to be able to act fast and often you need to be able to pay cash. Also, a bank may not want to deal with the hassle of evicting the borrower they foreclosed upon so the buyer needs to be willing to evict that person if necessary. Also, buying a property that is occupied means not being able to inspect the property, which increases risk. There may be title issues with the property. Many bank-owned properties are auctioned on websites such as Auction.com or Homesearch.com.

The first house I bought for speculative purposes I purchased last May. The house had had only one owner and the former owner was still living in the house. The house was sold in a cash-only auction. The bank selling the house was not a local bank so it did not know the local market. Furthermore, the auction incorrectly listed the square footage of the house and omitted the completely finished daylight basement which easily added $15,000 to the value of the house. Everything went right with the house, including the bank paying the former owner to leave just days before I closed on the purchase. The interior was in great shape except for worn-out carpets. I ended up renting out the house for most of a year, having it fixed up (with me doing some of the simple work and paying contractors to replace all the carpet, install a granite countertop in the kitchen, and do some landscaping).

After everything went right, I ended up selling the house just over a year after I purchased it for a profit of about $15,000 to $20,000. That is not bad but the house also sucked up a good chunk of my free time and I probably could have made more money just spending the time working on improving my trading.

One good thing about buying such distressed bank-owned properties is that there is minimal due diligence possible and it can easily be done online — so there is little cost to investigate and put in lowball bids on many properties. And while lowball bids will fail most of the time, they will occasionally work, especially if the person in charge of selling the property is motivated to just sell the property as quickly as possible. In fact, my winning bid on the house I flipped was below the reserve price in the auction.

The same thing that can lead to getting a good price can also lead to large losses — just like in trading those without skills or who take too much risk will lose money.I came upon a few interesting condos in Chicago that are being auctioned off this weekend so I started my due diligence. One property I came across was

1221 N Dearborn St # 1408 Chicago, IL 60610. I thought it might make for a nice little pied-a-terre in the Windy City so I decided to bid. It is listed as being bank-owned on the auction page, but oddly enough there is no bank in the chain of title. Rather, the condo was sold just three months ago in a standard private party sale (with warranty deed). If the property was listed incorrectly due to a typo and I could see which unit was actually being sold in the legal description (ideally a larger unit) then this would be a great opportunity to buy cheap by knowing what no one else knows. Unfortunately, Auction.com doesn’t disclose that (or even the identify of the seller) and the ‘agent’ listed is a property management company that has not been kind enough to reply to my inquiry. Furthermore, a deed search revealed numerous foreclosed properties in the building. So if a bank is trying to auction off something they don’t own (I’ve seen that happen before) then it would just be a waste of my time to bid and potentially a waste of money.

 

8/13/2015 17-04-224-047-1173 WARRANTY DEED 1522541027 SEGURA ROBERT FLANDERS JODI S
10/19/2011 17-04-224-047-1173 LIS PENDENS 1129241025 CHICAGO THE TOWERS CONDOMINIUM ASSOCIATION
9/28/2007 17-04-224-047-1173 CORRECTION 0727144006 TOWERS CONDO ASSN PUBLIC 071422072
12/13/2006 17-04-224-047-1173 AMENDMENT CONDO DECLARATION 0634731033 TOWERS CONDO ASSN PUBLIC
5/11/1998 17-04-224-047-1173 ASSIGNMENT 98387365 TOWERS CONDO ASSN OAK BRK BK 25169127
8/10/1994 17-04-224-047-1173 WARRANTY DEED 94709841 SEGURA JULIE GAL-SEGURA JULIE
6/21/1991 17-04-224-047-1173 LIEN 91303438 MUELLER PAINTING & DECOR GANZ ROBERT
5/29/1991 17-04-224-047-1173 RELEASE 91254064 IMPERIAL FED SAV ASN MALEY MICHAEL P 86443648
10/18/1989 17-04-224-047-1173 ASSIGNMENT 89493921 ICA MTG CORP IMPERIAL SAV ASN 86443648
5/2/1988 17-04-224-047-1173 WARRANTY DEED 88184221 MALEY ELLEN S SEGURA JULIE
1/27/1987 17-04-224-047-1173 RELEASE 87052828 CONTINENTAL IL NATL B&T MALEY MICHAEL P 26899033
9/29/1986 17-04-224-047-1173 ASSIGNMENT 86443649 MIDWEST FUNDG CORP ICA MTG CORP 86443648
9/29/1986 17-04-224-047-1173 MORTGAGE 86443648 MALEY MICHAEL P MIDWEST FUNDG CORP 91254064

Disclosure: I have used both websites mentioned in this blog post and I may bid on the property described in this blog post. I have no relationship with any parties mentioned above. This blog has a terms of use that is incorporated by reference into this post; you can find all my disclaimers and disclosures there as well.

Excel Macro to run trade report on DAS Trader Pro trade log

I have been mucking about with some programming lately and I only just realized that the work I had been doing to get my average price on trades so I can enter it into my trade log was easily automated. The below Excel (2010 is the version I use) macro has made my life a little easier so I am sharing it here. This can be used with the ‘trade’ output of DAS Trader Pro (which I am currently using with Centerpoint Securities) but with slight changes could be used on the output from Sterling Trader Pro or other trading platforms. There are easier ways to get the summaries, but I make sure to record trades I make in my trade log with details including my trade plan and post-trade evaluation — most of the time I’ll put together all the trades in each ticker to save time and because I’m trading the stock with one strategy. So for my purposes I like having the average price (including fees) shown neatly.

First, start with how the data should be formatted prior to the macro working. Go to “Trade” in DAS Trader Pro and then click “Trades”. Select the columns and copy and paste into an Excel worksheet named “scratchpad” (and make sure to paste into column B). Then hit Control + A to select the entire range of data and run the macro (I have it hotkeyed on my computer to Control+P). This will create a new worksheet, run a pivot table, copy the pivot table data, delete the pivot table worksheet, and paste the pivot table data and price per share in an easy to read format in another new worksheet.

Here is how the data should be formatted in your trade report that you paste into Excel (you do not need a header row):

inputdata

And below is how the data will be output:

macro_output

Obviously, you can use this same basic code framework to get lots of other data easily (such as ECN fees, etc). The one thing this code will not do is account for per-trade fees. I don’t have them at Centerpoint (clearing through ETC) so I didn’t program them. Also, make sure you enter your per-share commission into the code. Use this code at your own risk — I provide it without warranty or support.

Warning: if you are a programmer you will find my code ugly. You have been warned.

Below is the code:

Sub DAStraderAvgPrices()

‘ DAStraderAvgPrices Macro
‘ For this to work you need to copy pasta the following columns from DAS into the ‘sheet ‘scratchpad’
‘Time | Ticker | Buy/Sell | Price | Shares | Route | ECN Fees | Amount of trade
‘Those columns all must be there in that order or it will mess lots of things up.
‘The trades must be pasted into column B and then select all the trade info ‘(control+A)

Dim myRange As Range
Dim i As Long
Dim HeaderRange As Range
Dim HeaderPasteRange As Range
Dim TopLeft As Range
Dim objTable As PivotTable
Dim objField As PivotField
Dim rng As Range
Dim ws1 As Worksheet
Dim pt As PivotTable
Dim rngPT As Range
Dim rngPTa As Range
Dim rngCopy As Range
Dim rngCopy2 As Range
Dim lRowTop As Long
Dim lRowsPT As Long
Dim lRowPage As Long
Dim PivotTableSheet As String
Dim celltxt As String

‘this is my commission rate
commission = 0.0035

Set myRange = Selection

‘sort by column C then D (ticker then buy/sell)
myRange.Sort Key1:=Columns(3), Order1:=xlAscending, Key2:=Columns(4) _
, Order2:=xlAscending, Header:=xlGuess, OrderCustom:=1, MatchCase:= _
False, Orientation:=xlTopToBottom
‘the above works! Yay!

‘this section calculates the cost basis (including ECN fees and commissions) of each fill
For i = myRange.Rows.Count To 1 Step -1
Set BuySell = myRange.Cells(i, 3)
If BuySell.Value = “B” Then
myRange.Cells(i, 8) = (myRange.Cells(i, 4) + commission) * myRange.Cells(i, 5) + myRange.Cells(i, 7)
ElseIf BuySell.Value = “S” Then
myRange.Cells(i, 8) = (myRange.Cells(i, 4) – commission) * myRange.Cells(i, 5) – myRange.Cells(i, 7)
ElseIf BuySell.Value = “SS” Then
myRange.Cells(i, 8) = (myRange.Cells(i, 4) – commission) * myRange.Cells(i, 5) – myRange.Cells(i, 7)
End If
Next i

‘Here we append the header row to the data
myRange.Cells(0, 1) = “Time”
myRange.Cells(0, 2) = “Ticker”
myRange.Cells(0, 3) = “Buy/Sell”
myRange.Cells(0, 4) = “Price”
myRange.Cells(0, 5) = “Shares”
myRange.Cells(0, 6) = “Route”
myRange.Cells(0, 7) = “ECN Fee”
myRange.Cells(0, 8) = “Amount”

‘Pivot table time!

‘only uncomment the following two lines when testing on specific region
‘ActiveWorkbook.Sheets(“scratchpad”).Select
‘Range(“B4”).Select

ActiveWorkbook.Sheets(“scratchpad”).Select
myRange.Cells(0, 1).Select

Set objTable = ActiveSheet.PivotTableWizard

Set objField = objTable.PivotFields(“Ticker”)
objField.Orientation = xlRowField
objField.Position = 1

Set objField = objTable.PivotFields(“Buy/Sell”)
objField.Orientation = xlRowField
objField.Position = 2

Set objField = objTable.PivotFields(“Shares”)
objField.Orientation = xlDataField
objField.Position = 1
objField.Function = xlSum
objField.NumberFormat = “##,###”

Set objField = objTable.PivotFields(“Amount”)
objField.Orientation = xlDataField
objField.Position = 2
objField.Function = xlSum
objField.NumberFormat = “##,###.##”

‘Pivot tables with multiple data fields have hidden field “data” —
‘adding the below line makes it display correctly
objTable.AddFields Array(“Ticker”, “Buy/Sell”), “Data”

‘Copy the Pivot table and paste it into a new worksheet as values
On Error Resume Next
Set pt = ActiveCell.PivotTable
Set rngPTa = pt.PageRange
‘On Error GoTo errHandler

PivotTableSheet = ActiveSheet.Name

‘If pt Is Nothing Then
‘ MsgBox “Could not copy pivot table for active cell”
‘ GoTo exitHandler
‘Else
Set rngPT = pt.TableRange1
lRowTop = rngPT.Rows(1).row
lRowsPT = rngPT.Rows.Count
Set ws1 = Worksheets.Add
Set rngCopy = rngPT.Resize(lRowsPT – 1)
Set rngCopy2 = rngPT.Rows(lRowsPT)

rngCopy.Copy Destination:=ws1.Cells(lRowTop, 1)
rngCopy2.Copy Destination:=ws1.Cells(lRowTop + lRowsPT – 1, 1)
‘End If

If Not rngPTa Is Nothing Then
lRowPage = rngPTa.Rows(1).row
rngPTa.Copy Destination:=ws1.Cells(lRowPage, 1)
End If

ws.Columns.AutoFit

‘Stopping Application Alerts
Application.DisplayAlerts = False

‘delete pivot table sheet
Sheets(PivotTableSheet).Delete

‘Add in some formatting and get price per share for buys/sells

Columns(“C:C”).ColumnWidth = 13.71
Columns(“D:D”).ColumnWidth = 14.86
Range(“G2”).Select
ActiveCell.FormulaR1C1 = “Price”
Columns(“G:G”).Select
Selection.NumberFormat = “0.0000”
Selection.ColumnWidth = 11.43
Range(“F3”).Select
ActiveCell.FormulaR1C1 = “=IF(ISBLANK(RC[-4]),””””,RC[-4])”
Range(“F3”).Select
Selection.AutoFill Destination:=Range(“F3:F197”), Type:=xlFillDefault
Range(“F3:F197”).Select
Range(“G3”).Select
ActiveCell.FormulaR1C1 = _
“=IF(ISBLANK(RC[-3]),””””,IF(ISBLANK(RC[-5]),””””,RC[-3]/RC[-4]))”
Range(“G3”).Select
Selection.AutoFill Destination:=Range(“G3:G202”), Type:=xlFillDefault

‘Loop through table to clear all rows that contain “Total”
Last = Cells(Rows.Count, “D”).End(xlUp).row
For i = Last To 1 Step -1
celltxt = Cells(i, “A”).Text
If InStr(1, celltxt, “Total”) Then
Cells(i, “A”).EntireRow.ClearContents ‘ USE THIS TO CLEAR CONTENTS BUT NOT DELETE ROW
End If
Next i

ActiveSheet.UsedRange.Select

exitHandler:
Exit Sub
errHandler:
MsgBox “Could not copy pivot table for active cell”
Resume exitHandler
End Sub

 

Disclaimer: I have no position in any stocks mentioned as of this post being published but I may trade them in the future. I am a client of Centerpoint Securities (clearing through ETC). I have no relationship with any other parties mentioned above. This blog has a terms of use that is incorporated by reference into this post; you can find all my disclaimers and disclosures there as well.

Calculating the value of $BIOF ex-rights

Note: the below post is only relevant for trading of BIOF on 9/24 and does not apply after the stock has gone ex-rights.

Tomorrow BIOF will start trading ex-rights, with each right giving the owner the right to buy 2.25 shares of BIOF at $5 (if the average price of BIOF over the next 10 days is under 6.25 then the $5 strike price is adjusted down to 80% of that 10-day average price — I ignore that in this calculation).

The rights started trading as BIOFR today and tomorrow everyone that owns BIOF today will have 1 share of BIOFR for each share of BIOF they own. Using a little bit of algebra we can determine the correct price of BIOFR for any given price of BIOF today. By my calculations, with BIOF at $9.11 BIOFR should be trading at $2.85 (it is currently $3.10 x $3.18).

BIOFP = BIOF post rights

BIOFR = 2.25 * (BIOFP – 5.00)
BIOF = BIOFR + BIOFP

BIOFP = BIOF – BIOFR
BIOFR = 2.25 * (BIOF – BIOFR -5)

Using Excel’s solver add-in I can then take the current price of BIOF and solve for the price that BIOFR should be trading at.

Of course, if I had just realized early on today that BIOF was not trading ex-rights yet, I could have bought it at about $6.60 or so for easy profits without any algebra.

Disclaimer: I have no position in any stock mentioned above. I have no relationship with any parties mentioned above. This blog has a terms of use that is incorporated by reference into this post; you can find all my disclaimers and disclosures there as well.

 

Owners of $CRMBQ stock no longer own Crumbs Bakeshop – yet it was still up 100% yesterday

Yesterday the stock of the bankrupt Crumbs Bakeshop (CRMBQ) went up over 100%. This is likely because foolish people who don’t understand bankruptcy heard the news about the purchase and think current shareholders will benefit. They will not.

See the order yesterday:

Order Under 11 U.S.C. § 105(a), 363 and 365 (I) Authorizing and Approving Sale of Substantially all of the Debtors’ Assets Free and Clear of Liens, Claims Encumbrances and Interests, (II) Authorizing and Approving Assumption and Assignment of Certain Unexpired Leases of Non-Residential Real Property in Connection with the Sale and (III) Granting Related Relief (related document:22 Motion re: for an Order Pursuant to 11 U.S.C. Sections 363 and 365 and Fed. R. Bankr. P. 2002, 6004 and 6006: (1) Approving “Stalking Horse” Asset Purchase Agreement for the Sale of Substantially All the Debtors’ Assets; (2) Approving Bidding Procedures and Form, Manner and Sufficiency of Notice; (3) Scheduling (A) an Auction Sale and (B) a Hearing to Consider Approving the Highest and Best Offer; (4) Authorizing the Debtors to Sell Substantially all their Assets Free and Clear of Liens, Claims, Encumbrances, and Interests and to Assume and Assign Certain Related Executory Contracts and Unexpired Leases; and (5) Granting Other Related Relief Filed by Michael D. Sirota on behalf of Crumbs Bake Shop, Inc.) Service of notice of the entry of this order pursuant to Rule 9022 was made on the appropriate parties. See BNC Certificate of Notice. Signed on 8/27/2014. (slf) (Entered: 08/27/2014)

See my post about the news reports of the sale of the assets to Lemonis Fischer Acquisition Corp and my earlier post detailing the stalking-horse bid details.

crmbq

See also the Wall Street Journal article on this from yesterday (excerpted below):

The investor group’s no-cash offer leaves unsecured creditors in the Chapter 11 case with few options for recovery. An attorney for the unsecured creditors said in court filings on Monday that a creditor committee could pursue lawsuits against as-yet-unnamed parties to earn money for the group.

Mr. Sirota said after the hearing that the company will liquidate its remaining holdings but that the bulk of the work is done with the conclusion of the sale.

Disclosure: I am short CRMBQ and CRMUQ and I am a day-trader. I may close my short position or short more at any time. My plan is to keep adding to my short on any spikes and then hold for 50%+ gains. I have no relationship with any parties mentioned above. This blog has a terms of use that is incorporated by reference into this post; you can find all my disclaimers and disclosures there as well.

The Confusing case of the Overseas Shipholding $OSGIQ bankruptcy

I follow LongShortGreek on Twitter and have found his information and thoughts about bankrupt stocks to be good and actionable. When he tweeted that the bankruptcy plan would give current OSGIQ shareholders $2/share worth of new equity I was intrigued by the seemingly obvious short.

See the most recent OSGIQ 10-K for the total share count:

As of March 3, 2014, 30,677,595 shares of Common Stock were outstanding.

See the most recent bankruptcy plan (dated March 7th, 2014).

From page 27 in the bankruptcy plan (emphasis mine):

(k) Class E1: Subordinated Claims and Old Equity Interests in OSG.
(i) Classification. Class E1 consists of all Subordinated Claims and
Old Equity Interests in OSG.
(ii) Treatment. Effective as of the Effective Date, on, or as soon as
reasonably practicable after the Initial Distribution Date, each Holder of an Allowed Class E1
Claim or Allowed Class E1 Old Equity Interest shall receive, in full satisfaction, settlement,
discharge and release of, its Allowed Class E1 Claim or Allowed Class E1 Old Equity Interest,
as the case may be, a pro rata share of Reorganized OSG Equity equal to $61.4 million, subject
to dilution on account of the Management and Director Incentive Program, the Rights Offering,
and the Commitment Premium Shares and Warrants. The Reorganized OSG Equity to be
distributed to each (x) Domestic Holder of an Allowed Class E1 Claim or Allowed Class E1 Old
Equity Interest shall be in the form of Reorganized OSG Stock, and (y) Foreign Holder of an
Allowed Class E1 Claim or Allowed Class E1 Old Equity Interest shall be in the form of a
combination of Reorganized OSG Stock and Reorganized OSG Jones Act Warrants, as necessary
for Reorganized OSG to comply with the Jones Act.
(iii) Voting. Class E1 Claims are Impaired and the Holders of Allowed
Class E1 Claims and Allowed Class E1 Old Equity Interest as of the Voting Record Date are
entitled to vote to Accept or reject the Plan.

So the shareholders of OSGIQ will receive shares in the new company equal to $61.4 million. Divide that by the number of shares and you get a value of $2.001 per share of OSGIQ.

For a contrary viewpoint see the shareholders’s response to the plan on February 26th (PDF).

Here are a couple recent filings by the debt & equity committee that bode well for the plan being approved:

http://www.kccllc.net/osg/document/1220000140328000000000011

http://www.kccllc.net/osg/document/1220000140319000000000010

So what is the catch? There are currently 170,000 shares of OSGIQ available to short at Interactive Brokers (FTP link to full short list) and the borrow rate is only 3.45% APR. That would indicate that there is something I am missing otherwise the borrow rate would be higher. For past obvious bankruptcy shorts like EKDKQ (Kodak) or EXMCQ (Excel Maritime) the borrow rates were way over 20% APR (closer to 60% if I recall correctly, and the effective borrow rate on each was well over 100% due to their low share price).

OSGIQ|USD|Overseas Shipholding Group Inc|10859|XXXXXXX81053|-3.37|3.45|1700000|

Equity holders have until April 4th to review and file objections to the plan. On that day the judge will review it (as I publish this I think that date has been delayed two weeks).

See this page for updates from the bankruptcy court.

For a contrary view of OSGIQ take a look at this random person’s tweets. I am thoroughly confused right now so I closed for a loss my original short position that I took two days ago.

osgiq

Disclaimer: I have no position in OSGIQ and I may short or buy at any time. I have no relationship with any parties mentioned above. This blog has a terms of use that is incorporated by reference into this post; you can find all my disclaimers and disclosures there as well.

A Brief recap of my trading in 2013

I have been working on finishing up my accounting for my taxes and the program I use to track my trades for tax purposes, Tradelog, also can put together some interesting and useful reports. Below are a couple of mine. Note: as with all trade data I provide here I believe these are correct but cannot guarantee that.

A few highlights: I traded 334 different stocks last year. Trades on just three stocks, FNMA, FMCC, and AAMRQ combined for $53,000 (about 1/6) of my profits. Every other stock on which I made more than $10,000 was a pump and dump of one sort or another: XUII, SWVI, PVEN (Awesomepennystocks pumps); TEWI (uncompensated Focus Media pump); OCTX and NAMG (mailer pumps); NNRX and GNIN (Brighton Markets pumps). Note that the largest loss by far was ($17,650) on TGRO — I ended up making over $16,000 net on that once 2014 trades are included (I am a mark-to-market trader so open positions at the end of each tax year are marked at the closing price of the stock).

Trade profits by ticker (PDF)

Weighted by shares (not by trade), 72% of my trades were winners. My total commission cost was $57,188.07. Not shown in any of these reports are my expenses: about $33,000, most of which was for short stock borrow fees.

2013 performance report (PDF)

profit chart

 

Disclaimer: I use Tradelog for tax preperation. I do not receive any benefit by referring people to it. No position in any stock mentioned above. I have no relationship with any parties mentioned above. This blog has a terms of use that is incorporated by reference into this post; you can find all my disclaimers and disclosures there as well.

 

Nutranomics $NNRX pump and dump (with emphasis on the dump) by “Brighton Markets”

Perhaps the most enigmatic stock promoters currently in business is the group known by traders as “Brighton Markets”. They bring huge volume to their promotions and their promotions last for weeks or months. Their two most recent promotions were of iTalk Systems (TALK) and Green Innovations Ltd (GNIN). Prior to these two promotions (their only promotions this year) Brighton Markets had been less successful and was best known for the epic dumps of their pumps. Despite the big moves up in TALK and GNIN, both had epic dumps as well. See my blog posts on prior Brighton Markets pumps GNIN and TALK.

gnin

Why is Brighton Markets the most enigmatic of current promoters? Well, the thing I find most interesting about them is that they appear to use their websites for only a brief period of time, two or three pumps, before abandoning them and adding new websites. While other promoters have added and shed lots of websites, the rapidity with which Brighton Markets abandons websites is far greater, more akin to the spam promoter “StockCastle” than to AwesomePennyStocks. Here is a current list of active Brighton Markets websites that I have discovered: note that only a few of these websites were also used for the TALK promotion.

nationaltradersassociation.com
NationalTradersAssociation.org
DividendSeeker.net
investors-alliance.com
tradersinsight.net
EquityPlays.com
Equity-Plays.com
BuysideTraders.com
InvestorsSense.com
InvestorsReports.com
Market-Digest.com
AnalystsCorner.com
WSReports.com
wallstsource.com
GainerHunters.com
STSense.com
PlatformAnalysis.com
ECAgrp.com
IndustryWeekly.net

Notice the IP addresses of the websites in the list below. Over the last year most traders of promoted stocks have become aware of the ease with which a person can run a reverse-IP search to see what other websites are on the same server and have the same IP as a promoter’s website. I guess the “Brighton Markets” folks thought they would make it a little harder by putting their websites on different IP addresses. Of course, because they are all hosted at OffshoreRacks.com, they have IP addresses that are very close and they share a domain name server. Once I figured that out it was easy to find their other functional websites (and many that are defunct).

 

Website IP Address
nationaltradersassociation.com 190.14.39.26
NationalTradersAssociation.org 190.14.39.26
DividendSeeker.net 190.14.39.29
investors-alliance.com 190.14.39.30
tradersinsight.net 190.14.39.19
EquityPlays.com 190.14.39.13
Equity-Plays.com 190.14.39.13
BuysideTraders.com 190.14.39.12
InvestorsSense.com 190.14.39.22
InvestorsReports.com 190.14.39.18
Market-Digest.com 190.14.39.21
AnalystsCorner.com 190.14.39.16
WSReports.com 190.14.39.17
wallstsource.com 190.14.39.17
GainerHunters.com 190.14.39.11
STSense.com 190.14.39.25
PlatformAnalysis.com 190.14.39.20
ECAgrp.com 190.14.39.23
IndustryWeekly.net 190.14.39.27

Here is a list of some of their defunct websites or websites that may not have ever been used:

WorldStreetFundamentals.com
BrightonMarkets.com
BollingerReport.com
BeforeTheCrowd.net
Provestor.net
TechnicalGroup.org
GainHunting.com
Micro-Cap.org
CFAReports.com
EquityPlayers.com
SmallCapitalNetwork.org
SectorTracker.org
QuickTickers.com
GainerHunter.com
TradersInsightMagazine.com
InvestmentNewsCenter.com
FinanceNewsletter.com
StockTipLine.com
GainHunter.com
GlobalEquityAlert.com
EquityLeader.com
MarketFoundations.com
BreakoutFinder.net
PennyStockplayerz.com
EquityMarketsinc.net
RisingSunReport.com

talk

Taking a page from the AwesomePennyStocks playbook, the Brighton Markets group has continued to send emails to the email lists of many now-defunct websites, including BrightonMarkets.com (email I received on 9/28 shown below):

nnrx_email

But even more interesting is that the CANSPAM-required information of all of these emails shows the following image:

membersealgray

 

Clicking on the “Legal Disclaimer” or “Compliance Disclosures” links takes you to different pages on the ECAgrp.com website. Visiting that website is like taking the blue pill and going down the rabbit hole. Evidently, ECA stands for “Ethics, Compliance & Awareness”. I never imagined that I would ever see a stock promoter talking up their ethical credentials. Perhaps even more bizarre is that at the footer at the bottom of that web page indicates that the ECA Group is a self-policing professional organization and links are given to file complains about a member and to submit an official inquiry from a regulatory body. That all sounds very professional, but of course every single promotion website that is part of the ECA Group is owned by the same promotion group, promoting the same stocks, and run on the same server.

self-reg

complaint

The cherry at the top of this absurdity sundae though has to be the WHOIS information on the website ECAgrp.com This “self-policing professional organization” has a website that was registered on 26 September 2013, after the promotion of NNRX had already begun.

whois

nnrx

[Edit 2013-12-12] There was an ‘analyst’ website setup to promote NNRX called EquitiesExpertise.com. A copy of their NNRX report is here.

Disclaimer: I have no position in any stock mentioned. I have no relationship with any parties mentioned above. This blog has a terms of use that is incorporated by reference into this post; you can find all my disclaimers and disclosures there as well.