Post by shark on Oct 23, 2015 17:18:20 GMT
I’ve got another shell company for you guys. Special Diversified Opportunities (OTC:SDOI) is a company that holds a combination of cash and NOLs. However, unlike my previous post, this company shades more towards the cash side. Cash Shells are different from NOL Shells in a couple of different ways. It is my belief that the biggest difference is how they are each designed. NOL Shells happen by accident. A company performs like shit so much to the point that it paradoxically has value to somebody. Everything about a Cash Shell is intentional.
Cash Shell companies begin when a normal corporation decides it no longer wants to be in business anymore after poor results, poor prospects, etc. They sell the operating business for cash. A company can go one of two ways at this point. It can either liquidate and distribute the remaining cash to shareholders, or more rarely, hold the cash and become a Cash Shell. The objective of the company is then generally changed to “seeking investment opportunities”. Cash Shells are more commonly formed when management also comprises the majority ownership of a company. Allow me to explain why.
Cash Shells can be broadly thought of as a melting ice cube. Even though the company just has cash and not much else, it still has expenses. They generally maintain an office, so that’s rent, utilities, and, of course, executive salaries. The board and high level executives that still remain at the helm of these enterprises literally get paid to do nothing. It is my life’s goal to one day be the CEO of a cash shell. For the reasons described above, Cash Shells are usually bad places to put money for a minority shareholder. However, the market is almost always slow to react to developments at these companies, whether they be an actual investment in a company or a change in management. This creates great opportunities for value snipers to swoop in.
That brings us to SDOI. The company holds about 24 million dollars in Cash and about 18.3 million in NOLs. According to a very recent 8-K, 3 out of 6 directors are leaving the company as well as the President. This was precipitated by Becker Drapkin, a small hedge fund, selling its 1/3rd stake in the company to B. Riley, an investment bank. I’ve been thinking about this, and I think it’s highly unlikely that B. Riley would make this purchase without any sort of plan. I assign a high probability to an investment being made at some point medium term. Im sure enough that I’m betting on it.
As for worst-case scenario, there is none. The company has a market cap of 22.29 Million dollars. On the other side, they have 24.18 Million in Cash minus 430k in expense accruals for 23.7 Million dollars in net cash. I’ll say again,
THIS COMPANY TRADES FOR BELOW NET CASH
The one thing I will look out for is excessive cash burn if no investment is made right away. Im not going to stick around just to put food on some I-bank cunt’s dinner table.
Cash Shell companies begin when a normal corporation decides it no longer wants to be in business anymore after poor results, poor prospects, etc. They sell the operating business for cash. A company can go one of two ways at this point. It can either liquidate and distribute the remaining cash to shareholders, or more rarely, hold the cash and become a Cash Shell. The objective of the company is then generally changed to “seeking investment opportunities”. Cash Shells are more commonly formed when management also comprises the majority ownership of a company. Allow me to explain why.
Cash Shells can be broadly thought of as a melting ice cube. Even though the company just has cash and not much else, it still has expenses. They generally maintain an office, so that’s rent, utilities, and, of course, executive salaries. The board and high level executives that still remain at the helm of these enterprises literally get paid to do nothing. It is my life’s goal to one day be the CEO of a cash shell. For the reasons described above, Cash Shells are usually bad places to put money for a minority shareholder. However, the market is almost always slow to react to developments at these companies, whether they be an actual investment in a company or a change in management. This creates great opportunities for value snipers to swoop in.
That brings us to SDOI. The company holds about 24 million dollars in Cash and about 18.3 million in NOLs. According to a very recent 8-K, 3 out of 6 directors are leaving the company as well as the President. This was precipitated by Becker Drapkin, a small hedge fund, selling its 1/3rd stake in the company to B. Riley, an investment bank. I’ve been thinking about this, and I think it’s highly unlikely that B. Riley would make this purchase without any sort of plan. I assign a high probability to an investment being made at some point medium term. Im sure enough that I’m betting on it.
As for worst-case scenario, there is none. The company has a market cap of 22.29 Million dollars. On the other side, they have 24.18 Million in Cash minus 430k in expense accruals for 23.7 Million dollars in net cash. I’ll say again,
THIS COMPANY TRADES FOR BELOW NET CASH
The one thing I will look out for is excessive cash burn if no investment is made right away. Im not going to stick around just to put food on some I-bank cunt’s dinner table.