Dry Ships Inc. (Nasdaq:DRYS) Don’t Try This at Home Kids

Dry Ships Inc. (Nasdaq:DRYS)

[This is an updated version of a report we published on February 1, 2017]

Dry Ships Inc. (Nasdaq:DRYS) has it all – an intriguing Chairman, thrilling price and volume action, and industry commentary that would generously be classified as cautious. The company trades on the Nasdaq under the ticker DRYS and has been dominating trader chat rooms for several months. To add to the intrigue, rumors persist that Kalani no longer owns any of the shares it received in the January transaction and Economou, Chairman of Dry Ships Inc. (Nasdaq:DRYS), has used a financing scheme that enriches himself without risking any of his own funds.

An investor that purchased DRYS shares five years ago, Feb. 1, 2012, would have seen their investment, adjusting for reverse splits and dilution, lose 99.9876% of its value. So how could such a company survive not only de-listing but also investor confidence? The de-listing question is readily answered by multiple reverse stock splits and increased borrowing that some people claim serves no purpose other than to keep a failed company afloat. The company is 99.8% below its 52-week high and, according to its latest quarterly report, is burning cash at twice the rate of the previous quarter. Lastly, reported 2016 revenues were about 5.3% of their 2015 levels. To be fair – Dry Ships Inc. (Nasdaq:DRYS) sold off a lot of assets to reduce/restructure their debt load. But the story around Dry Ships Inc. (Nasdaq:DRYS) and its chairman is intriguing.

On December 1 of 2016 George Economou purchased most of Dry Ships Inc. (Nasdaq:DRYS) bank debt. Eleven days later, Dry Ships announced the successful completion of a $100 million equity raise in exchange for convertible preferred shares and warrants. On December 15, Dry Ships received an increase in their credit line from Economou to $200 million after the company repaid over $30 million. At the same time Economou lowered his firm’s management fees in return for 30% of all future realized asset value increases. To continue to add to the complexity, all within less than a month, Dry Ships Inc. (Nasdaq:DRYS) entered into a financing agreement with mysterious Kalani Investments for another $200 million in an equity placement. So, what did Dry Ships do with their funding? They bought ships from a company reportedly controlled by George Economou – Chairman of Dry Ships. And in the middle of all of this, DRYS outstanding shares grew from approximately 1.1 million to over 107.9 million in less than two months. On February 17, 2017 the company released news (and interestingly made specific mention that Kalani and Dry Ships have no affiliation) of a further $200 million Kalani investment in return for shares of DRYS common stock that could take place over the next two years.

Throughout all of this, Dry Ships has been extensively commented on in financial media. Some of the article headlines include the titles “DryShips Stock: The Worst Dollar You’ll Ever Spend” and “George Economou Is The Main Reason To Sell Dryships” – both on SeekingAlpha.com. The MotleyFool.com published an article with the headline “Why DryShips’ Shares Vacillate So Much and How It’s CEO is Hanging Investors Out to Dry”. To be fair, articles on more populist financial media websites are purported to be no less damning if one can read between the lines like a professional trader.

Still, DRYS stock has been the big topic in trader chat rooms. The increased volume and attention have led to massive liquidity that few, if any, stocks of DRYS capitalization enjoy. Since Mr. Economou’s entrance, DRYS has averaged over 13.5 million shares traded daily. In September and October of 2017, prior to Mr. Economou’s entrance, less than 8,000 shares traded hands on average. The ending to this story has yet to be written. Mr Economou may come off as a genius that schooled the more conventional observers of his actions and scoffed. Or the last one out of the DRYS stock pool may be left with nothing more than the thrill of a ride that few have seen before.

I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 96 hours. All information, or data, is provided with no guarantees of accuracy.

Airborne Wireless Networks (OTCMKTS: ABWN) Poised to Disrupt?

The explosion of the internet age saw hundreds of billions of dollars spent to lay down wire and fiber-optic cables that would carry more information in an hour than had been created in all of man’s existence. Cell towers were erected that allowed electronic voice, and later data, communications to travel through the air. Iridium Communications (previously known as Iridium Satellite LLC) was the first to attempt to bring the information superhighway to the entire world. They launched a constellation of low-orbit satellites that allow their users to access digital voice/data communications anywhere in the world – at an expense that most find prohibitive. Now the world has Airborne Wireless Networks (OTCMKTS: ABWN). A company that has a intriguing, patented approach to global voice/data communications at a fraction of the current cost by utilizing airplanes instead of costly satellites.

Simi Valley, CA-based Airborne Wireless wants to fill the geographic “black holes” in the world’s digital communications by linking commercial aircraft in flight.  Each aircraft participating in the network acts as an airborne repeater or router, sending and receiving broadband signals from one aircraft to the next and creating a digital superhighway in the sky.  Unlike Iridium Communications, Airborne Wireless Networks (OTCMKTS: ABWN) will not market to end-users, it will instead sell access to its network to internet service providers and telephone companies. ABWN has started marketing itself on Fox Business News.

The efficiency and convenience of such a network is arguably unparalleled when compared to existing alternatives. Oil rigs, outdoor enthusiasts, or countries that do not enjoy a digital infrastructure comparable to the developed words’ – all could now have equal access to the internet.

In 1998, during the pioneering days of wireless data-connectivity, Airborne Wireless Networks (OTCMKTS: ABWN) inventor submitted a patent application to the US patent and trademark office, and on September 4, 2001, US patent number US 6,285,878 B1 was granted. A few days later an event occurred which changed the airline industry and which would delay development of this disruptive technology for years.

Fast-forward to 2016, Airborne Wireless Networks (OTCMKTS: ABWN)acquired the patent and months later announced that it received an FAA Project Number for its Supplemental Type Certificate (STC) application to install a Broadband Transceiver System on Boeing 757-200 aircraft. In December of 2016, ABWN entered into an agreement with Electric Lightwave Holdings, Inc. The agreement allows the Infinitus Super Highway™, once implemented, to reach the end users. Without a ground link, users would have no way to access the ABWN network.

In January of 2017, Airborne Wireless Networks (OTCMKTS: ABWN) and Air Lease Corporation (NYSE: AL) announced they entered into a Memorandum of Understanding with regards to a strategic marketing partnership for Airborne Wireless Network’s (OTCMKTS: ABWN) proposed broadband wireless networks. Los Angeles, CA-based Air Lease Corporation owns 240 aircraft, including 181 single-aisle narrow-body jet aircraft, 40 twin-aisle widebody jet aircraft, and 19 turboprop aircraft. Under the terms of the agreement, Air Lease Corporation will act as the exclusive marketing agent and use its extensive network of airline customers to market the “Infinitus Super Highway™” to multiple airline customers throughout the world.

Investors seem to be responding positively to Airborne Wireless’ concept and progress. A year ago, AWBN (OTCQB: ABWN) was trading at $0.25, but closed Friday, February, 3, 2017, at $2.17 with a market cap over $150 million and over one million shares traded. Should Airborne Wireless Networks (OTCMKTS: ABWN) continue to successfully execute its vision, it will forever change society. No longer will people or businesses have to factor in internet access availability when deciding where to locate. That makes it a company with a potentially high disruption factor not only in the sense of technology, but also how we function as a society.

I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 96 hours. All information, or data, is provided with no guarantees of accuracy.

The Drama That is Dry Ships Inc. (Nasdaq: DRYS)

Dry Ships Inc. – Nasdaq: DRYS

Dry Ships Inc. has it all – an intriguing Chairman, thrilling price and volume action, and industry commentary that would generously be considered as cautious. The company trades on the Nasdaq under the ticker DRYS and is dominating trader chat rooms. The catalyst to the latest increase in trading volume is related to news that Dry Ships raised $200 million in an equity sale to Kalani Investments – a BVI-based firm with little transparency. To add to the intrigue, rumors persist that Kalani no longer owns any of the shares it received in the transaction and George Economou, Chairman of Dry Ships Inc., has used a financing scheme that enriches himself without risking any of his own funds.

An investor that purchased DRY shares five years ago, Feb. 1, 2012, would have seen their investment, adjusting for reverse splits and dilution, lose 99.9876% of its value. So how could such a company survive not only de-listing but also investor confidence? The de-listing question is readily answered by multiple reverse stock splits and increased borrowing that some people claim serves no purpose other than to keep a failed company afloat.

On December 1, of 2016 George Economou purchased most of Dry Ships bank debt. Eleven days later, Dry Ships announced the successful completion of a $100 million equity raise in exchange for convertible preferred shares and warrants. On December 15, Dry Ships received an increase in their credit line from Economou to $200 million after the company repaid over $30 million. At the same time Economou lowered his firm’s management fees in return for 30% of all future realized asset value increases. To continue to add to the complexity, all within less than a month, Dry Ships entered into a financing agreement with mysterious Kalani Investments for another $200 million in an equity placement. So, what did Dry Ships do with their funding? They bought ships from a company reportedly controlled by George Economou – Chairman of Dry Ships. Then the unconfirmed whispers started that Kalani had sold all their shares to the public, at a small profit, and now hold no equity in DRYS. And in the middle of all of this, DRYS outstanding shares grew from approximately 1.1 million to over 107.9 million in less than two months then went through an 8:1 reverse split. Some people claim that Economou’s financing scheme basically used shareholder funds to buy ships from a company he controls with equity funding from a debt-laden and financially unsustainable company he also controls (Dry Ships Inc.).

Throughout all of this, Dry Ships activity was extensively commented on in the financial media. Some of the article headlines included “DryShips Stock: The Worst Dollar You’ll Ever Spend” and “George Economou Is The Main Reason To Sell Dryships” – both on SeekingAlpha.com. The MotleyFool.com published an article with the headline “Why DryShips’ Shares Vacillate So Much and How It’s CEO is Hanging Investors Out to Dry”. To be fair, articles on more populist financial media websites are purported to be no less damning if one can read between the lines like a professional trader.

Still, DRYS stock has been the big topic in trader chat rooms. The increased volume and attention have led to massive liquidity that few, if any, stocks of DRYS capitalization enjoy. The ending to this story has yet to be written. Mr Economou may come off as a genius that schooled the more conventional observers of his actions and scoffed. Or the last one out of the DRYS stock pool may be left with nothing more than the thrill of a ride that few have seen before.

I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 96 hours. All information, or data, is provided with no guarantees of accuracy.

Ixia (Nasdaq: XXIA) Take-Over Rumors Push Shares Higher

Ixia – Nasdaq: XXIA

News that Keysight Technologies Inc. (Nasdaq: KEYS) is in talks to acquire U.S. data technology company Ixia has sent their shares, traded on the Nasdaq under ticker XXIA, up over 7% on moderate volumes. Shares ended the regular session at $16.55 but the after-hours session has seen the price hit $17.75.

Ixia provides application performance and security solutions to companies and governments worldwide. Customers worldwide use Ixia products to verify their designs, optimize their performance, and ensure protection of their networks to make their applications stronger.

In 2011 reported Ixia sales were $311.4 million and in 215 the figure hit $516.9 million. EPS for XXIA was negative in 2014 (-$0.54) but rebounded to $0.08 EPS in 2015. Six firms follow XXIA and four rate the shares as a “Strong Buy” while two rate XXIA as a “Hold”. The consensus price target for XXIA is $16.

 I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 96 hours. All information, or data, is provided with no guarantees of accuracy.

1/24/2017
Ticker Symbol XXIA
Last Price a/o 7:36 PM EST  $                    17.75
Average Volume 608,000
Market Cap $1.36 Billion
Sales $495.2 million
Shares Outstanding 82.37 million
Share Float 62.48 million
Shortable Yes
Optionable Yes
Inside Ownership 0.50%
Short Float 0.96%
Short Interest Ratio 0.98
Quarterly Return 38.84%
YTD Return 2.80%
Year Return 70.44%

Global Ocean Group (Nasdaq: GOGL) Shares Continue Climb

Golden Ocean Group Ltd. – Nasdaq: GOGL

Golden Ocean Group Ltd. has been up over 7% on large volumes. Traded on the Nasdaq under ticker symbol GOGL, shares reached $6.00 on double the daily average volume. Investors may be reacting to continued upgrades announced by Global Ocean Group in their financial guidance.

Golden Ocean Group Ltd. (GOGL) is an international dry bulk shipping company based in Bermuda, mainly operating in the Capesize, Panamax, and Supramax segments. GOGL is listed on Nasdaq and the Oslo Stock Exchange. Global Ocean Group owns and controls a fleet of 70 vessels chartered in on long term time charter contracts.

Golden Ocean Group sales have increased year-on-year since 2012 when it reported sales at $37.5 million – in 2015 reported sales were $190.2 million. GOGL shares have not been as impressive. EPS for GOGL was $1.20 in 2012 but the company reported a loss of $7.30 for GOGL in 2015. Currently GOGL is trading above the analysts’ consensus price target of $4.25. Three firms follow Global Ocean Group and one rates GOGL as a “Strong Buy” while the other two rate GOGL shares as a “Sell”.

I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 96 hours. All information, or data, is provided with no guarantees of accuracy.

AppDynamics, Inc. (Nasdaq: APPD) Set to Be 2017’s First Unicorn IPO

AppDynamics, Inc. (Nasdaq: APPD)

San Francisco, CA-based AppDynamics will be the first tech “unicorn” to test the IPO waters this year. Reports suggest that the application performance management firm is looking to raise upwards of $150 million in the market. SEC filings indicate that 12 million shares will be listed with an initial pricing around $12.

AppDynamics sells software to businesses that measures their own software and infrastructure performance. The company states in its regulatory filing that their software can ““enable our customers to align the objectives of their business, product development and IT operations teams.” While revenue growth has been good, AppDynamics lost $92 million in 2015 and $95 million in 2016.

The performance measurement sector is only worth about $3 Billion and AppDynamics, according to reports, values itself between $1.2 and $1.5 Billion. Given that other tech giants such as IBM and Microsoft also occupy the space, investors may feel that the $12 IPO price could be reaching.

I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 96 hours. All information, or data, is provided with no guarantees of accuracy.

 

Energous Corp. (Nasdaq: WATT) Reaches New Highs on Heavy Volume

Energous Corporation; Nasdaq: WATT

SNU first covered Energous Corporation in December when the U.S. Patent Office rejected a patent challenge. Today the shares, traded on the Nasdaq under WATT, have reached new all-time highs and the stock is up over 5%. Volumes are more than double the average.

Below is our original December 22, 2016 report:

Shares of Energous Corporation are up close to 10% on heavy volume. Energous Corporations trades on the Nasdaq under the ticker symbol WATT. Yesterday WATT closed at $17.48 but today’s morning trading has seen the shares trading as high as $19.28.

Energous Corporation is the developer of WattUp®—an award-winning, wire-free charging technology that Energous hopes will transform the way consumers and industries charge and power electronic devices at home, in the office, in the car and beyond. WattUp is a radio frequency (RF) based charging solution that delivers intelligent, scalable power via radio bands, similar to a Wi-Fi router. WattUp differs from other wireless charging systems in that it delivers power at a distance, to multiple devices – thus resulting in a wire-free experience that saves users from having to plug in their devices.

In November the U.S. Patent Office’s Trial and Appeal Board (PTAB) rejected a challenge to the Energous patent.

“Yesterday’s decision from the PTAB confirms our steadfast confidence in the strength of our intellectual property and strategy surrounding our WattUp technology,” said Stephen R. Rizzone, president and CEO of Energous. “As a licensing and semiconductor company, protecting and securing our patents is an important element of our goal of maintaining a dominant leadership position in the emerging market of wire-free power. We will continue to vigorously defend our intellectual property as we innovate and develop breakthrough wire-free charging technologies.”

Three firms follow Energous Corporation and all three give WATT shares a “Strong Buy” rating.

I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 96 hours. All information, or data, is provided with no guarantees of accuracy.

1/13/2017
Ticker Symbol WATT
Last Price a/o 10:52 AM EST  $                    20.04
Average Volume 641,000
Market Cap $361 million
Sales 1.3 million
Shares Outstanding 18.85 million
Share Float 14.08 million
Shortable Yes
Optionable Yes
Inside Ownership 2.30%
Short Float 29.90%
Short Interest Ratio 6.57
Quarterly Return 20.28%
YTD Return 13.71%
Year Return 249.64%

HMN Financial Inc. (Nasdaq: HMNF) Stellar Results but is Anyone Watching?

HMNF Financial, Inc. – Nasdaq: HMNF

Shares of HMN Financial Inc. bucked the banking sector trend today and ended up over 6%. HMNF, traded on the Nasdaq, closed at $17.35 on Wednesday and closed today at $18.50 on heavy volume. Today’s rise in value was notable when positioned against the Thomson Reuters Financials Index that saw a 0.27% drop. However, HMNF has been doing well for years. Since it traded below $2.00 in 2012, the shares of MNF Financial Inc. have had a relatively steady climb upwards.

HMN Financial, Inc. is a stock savings bank holding company, which was incorporated in Delaware in 1994. The Company owns 100 percent of Home Federal Savings Bank. Home Federal, originally chartered in 1934, has a community banking philosophy and operates retail banking and loan production facilities in Minnesota, Iowa, and Wisconsin. The Bank has two wholly owned subsidiaries, Osterud Insurance Agency, Inc. which offers financial planning products and services, and HFSB Property Holding LLC, which acts as an intermediary for the bank in holding and operating certain foreclosed properties.

HMN Financial Inc. had impressive 3rd quarter results. From their press release:

Year to Date Summary

  • Net income of $4.7 million, up $2.8 million, compared to net income of $1.9 million in first nine months of 2015
  • Diluted earnings per share of $0.99, up $0.61, compared to diluted earnings per share of $0.38 in first nine months of 2015
  • Net interest income of $19.5 million, up $5.2 million from first nine months of 2015
  • Total assets increased $43 million, or 6.6%, in first nine months of 2016

Interestingly, no analysts cover HMN Financial Inc. An interesting observation when you consider the shares have increased 900% since 2012. There is a lot of inside ownership and little short sales on HMNF.

I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 96 hours. All information, or data, is provided with no guarantees of accuracy.

12/29/2016
Ticker Symbol HMNF
Last Price a/o 4:00 PM EST  $                    18.50
Average Volume 3,400
Market Cap $77.9 million
Sales $5.8 million
Shares Outstanding 4.5 million
Share Float 3.52 million
Shortable Yes
Optionable No
Inside Ownership 31.36%
Short Float 0.06%
Short Interest Ratio 0.65
Quarterly Return 22.10%
YTD Return 50.22%
Year Return 50.22%

Update! Live Ventures Inc. (Nasdaq: LIVE) Announces 136% Earnings Increase!

Reporting its most successful year in the Company’s history, Live Ventures reported a record $79M in revenues, an increase of 136 percent over the previous year, and net profit of approximately $17.82M, representing earnings per share (EPS) of $8.92.

Stockholders’ equity, which is management’s preferred measurement for performance, increased by 192 percent over 2015.  Since present management took over five years ago, stockholders equity has grown at a rate of 100.58 percent compounded annually.

“Live Ventures has truly come a long way since its founding in 1968, when we were known as Nuclear Corporation of New Mexico,” said Jon Isaac, CEO of Live Ventures Incorporated. “We are elated with these most recent results and are grateful for the hard work of our employees, who were essential to the Company’s recent success.”

Live Ventures Inc. – Nasdaq: LIVE

Today Live Ventures Inc. announced that it will announce financial results from its fiscal year-end 2016 on December 28, 2016 – tomorrow. Shares are traded on the Nasdaq under the ticker LIVE. LIVE shares have done well recently. LIVE traded under $15 at the beginning of December, but today’s high is over $25. This could be an indicator of investor sentiment regarding tomorrow’s earnings announcement.

Live Ventures Incorporated, based in Las Vegas, NV, operates through three segments: Legacy Merchant’s Services, Manufacturing and Industrial Products, and Online Marketplace Platforms. It manufactures and markets carpets and rugs, and yarn products through carpet dealers for residential, niche commercial, and hospitality end-markets, as well as engages in the resale of hard surface flooring products. The company also operates LiveDeal.com, a deal engine that connects restaurants with consumers, as well as offers marketing solutions to restaurants to boost customer awareness and merchant visibility on the Internet. It also engages in the online retail of products that range from kitchen and dining products, apparel, and sporting goods to children’s toys and beauty products. In addition, the company develops and markets a suite of products and services to meet the online marketing needs of small and medium businesses.

LIVE shares have never enjoyed postive EPS. However, 2015 reported sales were $33.4 million – more than four times the reported 2014 reported sales of $7.3 million. While outstanding shares of Live Ventures Inc. have increased each year, there are no reported sales of LIVE even though the company has an inside ownership over 50%.

I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 96 hours. All information, or data, is provided with no guarantees of accuracy.

12/27/2016
Ticker Symbol LIVE
Last Price a/o 11:45 AM EST  $             25.05
Average Volume 3.05 million
Market Cap $66.58 million
Sales $78.1 million
Shares Outstanding 2.82 million
Share Float 1.81 million
Shortable Yes
Optionable Yes
Inside Ownership 50.20%
Short Float 26.30%
Short Interest Ratio 2.26
Quarterly Return 126.15%
YTD Return 169.52%
Year Return 124.86%

GoPro, Inc. (Nasdaq: GPRO) Short Target – But for How Long?

GoPro Inc.; Nasdaq: GPRO

Since November 7, 2016 four of the 15 analysts covering GoPro Inc. have downgraded its shares – traded on the Nasdaq under ticker symbol GPRO. Currently two analysts rate it as a “Strong Buy”, ten rate it as a “Hold”, one gives it an “Underperform”, and two have it rated as a “Sell”.

In 2014 GPRO was trading over $90, today it is trading in the $9 handle. GPRO shares have a Short Float figure over 32%. This means that for all the shares typically available to the investing public, over 32% have been borrowed as part of a short-sale which will profit if the shares decline in price. This is a fairly high figure by industry standard.

But the blame does not fall solely on short-sellers. GoPro Inc made an expensive effort to be a deliverer of content. Although they spent a lot of money trying to develop that market, success never materialized and GoPro Inc recently announce it will lay off about 15% of its workforce in an attempt to return to profitability in 2017.

Should GoPro Inc. continue its sales growth (year-on-year increases since 2011) and reverse GPRO EPS losses, shorts could be forced to cover their positions which might send shares of GPRO up rapidly. One must wonder just how much more the bottom is for this beleaguered stock.

I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 96 hours. All information, or data, is provided with no guarantees of accuracy.

12/22/2016
Ticker Symbol GPRO
Last Price a/o 2:48 PM EST  $               9.02
Average Volume 6.19 million
Market Cap $1.1 Billion
Sales $1.08 Billion
Shares Outstanding 135.57 million
Share Float 100.59 million
Shortable Yes
Optionable Yes
Inside Ownership 0.50%
Short Float 32.59%
Short Interest Ratio 5.3
Quarterly Return -44.55%
YTD Return -50.58%
Year Return -51.47%