Market cap: $1.9 billion.
Shares out: 1.9 billion.
What happens to a company that has, for years, been seen as a safe Canadian place to keep your institutional money when that same company's stock drops goes below the price where institutional investors can hold it?
We’re about to find out.
Bombardier (
TSX:BBD.B,
Forum), Canada’s long-time aerospace, tram and train supplier to the world has seen its share price halve since last July and drop by 2/3 since this time last year, on the back of, well, nobody actually wanting to do much business with it.
Today, it fell below the magic one-dollar line, ending the trading day at $0.99.
You’ll recall the City of Toronto recently telling Bombardier to
shove its long overdue streetcars where le soleil don’t shine, warning it would preclude them from bidding on future contracts due to ridiculous delays in supplying product. Meanwhile, the new C-Series plane, which relies on fuel economy as a main selling point, isn’t selling so hot what with fuel costs bursting through the floor.
While there are some orders floating around, they often rely on other factors falling into place – like
government approval of airport expansions that
never came to be.
So Bombardier is telling Canadians it wants money. Lots of money. Money or who knows what might happen?
Well, what might happen is Bombardier becomes a penny stock, and maybe that’s for the best.
After all, it government is going to be asked to contribute $2-$3 billion to keep the thing afloat, why not just buy the whole thing for $4 billion (double what it’s currently worth), nationalize it, and use it to fulfill infrastructure projects across the country?
Or reject its demands for welfare, wait three months, and snag it when it’s at $0.50 per share.
American Apparel: 66% off!
Shares in woe-betode retail clothing hawker American Apparel (
OTO:APPCQ,
Forum) shed two thirds of their worth since Monday’s open, even after a judge told founder, (alleged)
sex pest, and former boss Dov Charney to take his $300m in hedge fund money and keep walking.
To be sure, getting out from under Charney’s shadow is one of the main things required for American Apparel’s team (shedding the stigma of
15 years of porn-ads is another), but as is his usual way, Charney opted not to walk off quietly in the distance,
instead posting a diatribe about his former company that said, among other things, “Now all stockholders will have their shares and value extinguished.”
So long $0.03.
He continued, “In December 2014, a private equity firm offered $1.30-$1.40 per share to take the company private. The board rebuffed this offer as well, as offering inadequate value to shareholders for a company they said was worth much more. Instead, the board pursued a path where only a year later the shareholders are receiving zero.”
“At the end of this saga, I, like the many former stockholders, will most likely be left with nothing,” Charney said. “Despite that, what gives me great optimism are the things I possess that can’t be stolen by a hedge fund; my ideas, values, drive and my passion. To that end I ask that my supporters stay tuned.”
I have been unable to confirm that earlier drafts of the Charney statement included the sign-off, “Also, butts are neat. Amiright?!”
Private placements now open to retail investors
No, you read that right – new rules (at least in Western Canada) have opened up private placement financings for regular Joe investors, with no maximum, as long as they go through a broker.
This is good timing as Stockhouse has just launched a private placement directory where investors who have been through an accreditation process can buy into financings online, without needing to hand deliver dozens of pages of printed out legalese and cheques and frustration.
Currently in the Deal Room, you’ll find three placements available – battery developer
EEStor (
TSXV:ESU,
Forum) (which is half placed), laser-based biomed firm
Medifocus (
TSXV:MFS,
Forum) (20% gone), and Active wear-focused CPC
Movarie (
TSXV:MOV.P,
Forum) (70% gone).
Find details at
https://stockhouse.com/dealroom
YOU get a rice cracker, and YOU get a rice cracker, and YOU get a rice cracker!
Weight Watchers (
NYSE:WTW,
Forum) stock has risen markedly in the last 48 hrs after Oprah announced she lost 28 lbs using the service - or at least that’s the story the media is trumpeting, but in actual fact, it appears ‘the Oprah effect’ has been basically a wash.
It’s true that WTW shares have jumped from $11.54 to $13.75 in the last few days on the back of the Oprah poundage drop. But when Winfrey
joined the Weight Watchers board back in October, taking a $43.2 million 10% stake in the company, that announcement added a whopping 47.7% to the share price, with her actual stock purchase (presumedly) having doubled it the previous day.
This all drove WTW stock to just under $20 per share, with further jumps in December taking it to $27 – almost six times what it had been before she came aboard.
But over the last month, all of that gain basically disappeared.
So if you’re looking for evidence that Oprah is a gamechanger, it appears her name matters more to daytraders than to long term investors.
Completely unrelated I’m sure, but stock in Wendy’s (
NYSE:WEN,
Forum), Pepsico (
NYSE:PEP,
Forum) and Krispy Kreme (
NYSE:KKD,
Forum) have dropped 10% since that diet kicked in. Just saying.
Amaya Gaming bets on sports betting growth
Who would ever have though that Amaya Gaming (
TSX:AYA,
Forum) would endure a long term slump in its share price? I mean, it deals in online casinos, for craps’ sake. It owns brands like PokerStars, Full Tilt Poker and has 97m registered users, only many of which are likely dealing with bankruptcy at any given point in time.
Amaya got beaten up by a ruling in a Kentucky court that said the company should repay losses for all Kentucky-based players between 2006 and 2011. That award came to US$290 million.
Then the judge, just for the hell of it, tripled the award and applied interest on top.
Amaya says it only made US$18 million from Kentuckians during the time in question and called the award ‘frivolous and egregious,’ which it pretty much is.
Elsewhere, the company had hoped to get stuck into the thriving but regulator-unfriendly daily fantasy sports business with its StarsDraft subsidiary, but as Attorneys General started pounding on industry leaders Draft Kings and Fan Duel for running a gambling operation without a license, (and with a lot more to lose by pissing off regulators) Amaya jumped out of the game quickly.
Its latest move is to go heavy on non-American sports betting with its
new BetStars operation, which it says will open users up to gambling in 25 sports, including eSports (that’s professional video gaming, for you folks over 32).
Meanwhile, Canada’s smallcap DFS entry, Fantasy Aces (
TSXV:FAS,
Forum) has been hovering around $0.03 in the absence of news, and continues to do business, believing it is operating within the law now that it has hired a compliance advisor.
The
most recent update stated revenue from its NBA arm was up 490% over a year prior, with prize money over $1 million. Not bad for a company with a $2.5m market cap, especially as Amaya has lost half its value since November.
HALF.
Laguna Blends kicking off soon?
Spoke to Naturally Splendid (
TSXV:NSP,
Forum) CEO Craig Goodwin (who has lost a whole person in weight the last few months) last week and asked him about Laguna Blends (
CSE:LAG,
Forum), a company that
NSP will be supplying over the coming months.
Laguna has stalled on the markets, a victim of delays in getting its product out, and a stock rollback that they had intended to get the share price up where institutional investors would take it seriously – only for an ensuing sell-off to take it right back to where it was.
Goodwin said his company is deep in the process of supplying product to Laguna, but has been waiting for a single ingredient to arrive so they can get underway. Laguna management, in the meantime, have been lending the company money it needs to get set for sales, rather than dilute the share base with more financing.
Meanwhile, Laguna President and CEO Stuart “Hot Pockets” Gray tells me he’s disappointed early investors have moved on, but believes the company will be better off in the long term having lost the daytrader crowd.
I’d be lying if I said I wasn’t disappointed to be a Laguna shareholder over the last few months. Clearly building a big MLM network has been a task that’s taken longer than the company planned, and bringing a new product to market is a process fraught with unseen delays.
But I honestly think it’s way oversold right now, the rollback has left the float ultra-tight, and won’t take much buying to get back to pre-rollback levels. At the current share price? I figure I might as well hold and see what Gray has coming.
But yeah, wish I was buying now, rather than playing catch-up.
Oh, and speaking of NSP, Goodwin isn’t telling me anything about what to expect in the weeks ahead. I mean, he’s talking to me. He never shuts up, to be honest, but he’s got something brewing and won’t tell me what and just keeps feeding me happy platitudes.
I’ve been working on a large piece that I *think* will reveal all, if my assumptions are correct, but I’ve never called Goodwin yet and not come away with something that he’s planning. This last call was eerily stonewally and, if what I think is brewing is actually brewing, that makes total sense.
NSP up 6.4% on the day, LAG flat.
--Chris Parry
https://www.twitter.com/chrisparry
FULL DISCLOSURE: Naturally Splendid, Medifocus and EEstor are Stockhouse Publishing marketing clients. The author owns stock in NSP and LAG. He does not own stock in Bombardier because that’s just silly.