The report for the period ended 8/15 came out after the close tonight and shows short interest in MLNK at 6,692,457 shares. That's down around 150K from the 6,855,272 shares reported 2 weeks ago.
MLNK short interest peaked in the 6/13 report at 7,361,924 shares, shortly after the convertible note offering.
There are synergies 2b had, in the distribution as you mention and the packaging as all555 commented. Then there is the ability of the company to use its NOLC to shield the earnings from taxes. Hopefully, IF (big if) MLNK is looking at a takeover here, they've done a lot more DD than we have and think it's a good fit.
If this is merely an opportunistic buy on their part, they could book a nice profit if they can sell at today's price or higher. My feeling is that there is more to it than this, but we'll have to wait to see how it plays out.
My thoughts exactly...I hope they have a plan to integrate the businesses...it is a distribution business, MLNK could provide Asia distribution channels...
sorry - volume 360K, not 260. Just saw some trades abover $32 for MED.
I went over to the MED message board last night and was unsuccessful in 3 attempts to post. Yahoo appears to have some kind on posting embargo on that board.
MED up around $2.80 now and the volume appears 2b picking up ~ 260K vs typical daily volume is 185.2k shares over the past 6 months (that last copied from the nasdaq site).
I examined MLNKs MED buys which were listed in their filing. They cited Aug14 as the date when the filing requirement hit - that looks like the day they had accumulated over 5% of shares o/s. The last buy they listed was Aug 21, so I'm hoping they continued to accumulate on Friday and yesterday. There was about 70-80K shares traded this morning in the high $29 & low $30 range, so if they were buying on any of those days, we should get an amended filing which shows that.
I did not think they had the ability to do a deal for Medifast but your notes make sense...only need 80 percent to consolidate the tax returns...
Once again not crazy about this...but maybe they will open up new market with MNLK's distribution network and there is the instant tax shelter...
At today's closing price, MLNK is up about $1.5M on their investment in MED.
I checked the nasdaq site for institutional holders, and found that tutes own 101% of the shares outstanding. That tells me there must be a fairly good-sized short position in this stock. The Yahoo profile is showing 2.57M shares short, which is considerable for a stock with less than 13M outstanding.
The market cap is around $370M, so I'm not sure MLNK could go for a takeover, though they might be able to leverage one, and MED might be amenable to some sort of partnership.
Med paid something like $11M in taxes (close to $1/share last year), their tax rate is around 34%. It would seem that with MLNK's net operating loss carryforward, they could take advantage of that.
Haven't been able to dig up any info on a possible "poison pill". Again, I'm not certain MLNK would go for a takeover. They do have a filing to issue $100M in securities and I think they got $100M from their convertible note offering. Additionally, H&H has an option to purchase 2M shares @ $5 which would add $10M to the coffers - last 10Q is showing $170M cash, so it looks as if they could do the deal, especially if you consider MED has around $65M in cash.
I'm scrambling around trying to do DD here, and this is by no means one of my big investments, though I'd love to see them utilize their tax assets.
I did consider that MLNK may be going for a deal to package & distribute MED products, which might replace some of the business lost.
Most of the information above is from my memory & any speculation on my part is just that, so do your own DD, and good luck to long-suffering MLNK stockholders...
Not very exciting...but the angle is that MLNK will take over the distribution of their products and that will enhance both MLNK's and Medifast's bottom line...they will make money on both ends of the transaction...
Otherwise this would be a major disappointment.
From the Yahoo description:
Medifast, Inc. is engaged in the production, distribution, and sale of weight loss and weight management products and other consumable health and diet products. It operates through two segments, Medifast and MWCC and Wholesale. The company offers bars, bites, pretzels, puffs, cereal crunch, drinks, eggs, hearty choices, oatmeal, pancakes, pudding, soft serve, shakes, smoothies, soft bakes, and soups under the Medifast and Essential 1 brands and for private label customers. It also provides nutritional products; and meal replacements comprising vitamins and minerals, as well as other nutrients essential for good health. The company operates Medifast weight control centers that offer programs for weight loss and maintenance, customized patient counseling, InBody composition analysis, and monitoring with a BodyGem that determines resting metabolic rates. As of December 31, 2013, Medifast, Inc. operated weight control centers in 75 locations; and 41 franchise centers. The company sells its products through various channels of distribution comprising the Internet, call center, independent health advisors, medical professionals, weight loss clinics, and direct consumer marketing. Medifast, Inc. was founded in 1980 and is headquartered in Owings Mills, Maryland.
They filed a form 13D tonight showing they hold 9.9% or 1,260,925 of the 12,739,149 Medifast shares outstanding
From the filing:
Item 4. Purpose of Transaction.
The Reporting Persons purchased the Shares based on the Reporting Persons’ continuing evaluation of attractive investment opportunities and potential acquisition opportunities and their belief that the Shares, when purchased, were undervalued and represented an attractive investment opportunity. Depending upon overall market conditions, other investment opportunities available to the Reporting Persons, and the availability of Shares at prices that would make the purchase or sale of Shares desirable, the Reporting Persons may endeavor to increase or decrease their position in the Issuer through, among other things, the purchase or sale of Shares on the open market or in private transactions or otherwise, on such terms and at such times as the Reporting Persons may deem advisable.
Item 5. Interest in Securities of the Issuer.
The aggregate purchase price of the 1,260,925 Shares owned directly by ModusLink Securities is approximately $35,390,787, including brokerage commissions. The Shares owned directly by ModusLink Securities were acquired with the working capital of ModusLink Securities.
So, it looks as if the "feeling" that long-time watchers here had was correct. MLNK is making a move...
Let's see how it plays out...
Up today as much as the "big" volume day earlier in the week...this has happened before a bigger move...is the MM accumulating shares? Has he a block buy but does not want to cause a run up?
Any thoughts out there?
At least earnings are around the corner now, probably mid-September. I still feel that they will announce a deal with all that money they have. I see stock heading back towards $6.00. This is also a good time of year for MLNK, usually head up in the Fall-early winter.
I do not think an acquisition would be restricted by earnings release...if they have a deal they will announce it. Six months since the bond issue was my timeline and we are about there...
I hoping for news by 9/15...
Almost thought of buying more on the hope it means something...but I have done that before...
Something is up...early earnings information? A deal...must be some news...