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Research Frontiers Inc. Message Board

  • threespeech threespeech Mar 12, 2012 1:33 PM Flag

    Thesis

    Did you ever wonder why Joe Harary never wanted to discuss the stock price until recently? Why did both Joe and the CFO question the movement of the stock price in the last quarterly report conference call in regards to the SLK/Magic Sky Control announcement? Did Joe really question the price movement or does he really know why?

    Why are the "short" posters always so elated in anticipation of the next PIPE?

    Why do the "short" posters never worry about a short squeeze?

    Why in the past year did short interest decrease 48% and the stock price fall by 41%? That's not the first time that has happened either.

    In the past three short interest reporting periods why did short interest decrease 20% and the stock price decline 3%?

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    • Three,

      I think you raise some interesting points.

      My thesis is that nobody has any real confidence in management to deliver on their business model, because management is about collecting salaries from the repeated sales of new stock through PIPES and private placements that are hedged by prior short sales. The business has never demonstrated that they are about selling the product, or having quality licensees that are really committed to SPD and generating a high volume of product sales.

      #1) Stock price discussion by CEO and CFO: I don't feel either of those guys in ANY company have much business talking about stock price, nor should they be rewarded for its movement. They should be only be focused on enhancing the profit and value of the business.

      #2) A PIPE is dilutive to existing stakeholders. A company's value is based on a) hard asset value b)market value and c)a multiple on earnings. When a PIPE is introduced it is generally predictive of a reduction in value of the company as it reduces prorata hard asset value, market value and raises the earnings multiple.
      #3) Short squeeze is actually pretty rare. A squeeze presumes the company's purported problems are not real or way overstated (Netflix is a recent case of problems being overstated-a company with products, customers, income and a cloud of huge risk to all three changing still remains--but for now, just right now, the sky is blue). I think there is such a huge lack of concern that Joe and Bob are committed to selling anything but stock, there is little concern of a significant income derived from sales. The SPD products remain arcane, limited in availability (20 SLK's on cars.com) and, to your point-expensive. Last, the history of disappointments and overstatements, doesn't leave a lot of fear in shorts (or real optimism in real longs).
      #4)There is not a lot of money to be made shorting a three dollar stock. Especially one that is kept on life-support with PIPES every 2 years. There is also not a lot of enthusiasm among longs (the long suffering long is no joke). The short covering has given many an overdue escape window. For #4 and #5) There seems to be more exuberance in selling than in covering a short (the only buying that is out there). The price of the stock is perceived to have more downside than upside...and all of that is said in the face of the Mercedes MSC. Nobody trusts management.

    • why don't you tell us.

 
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