During the month of December, short interest increased by over 800,000 shares and ended the month at 4.1 million. Trying to digest the revenue miss, especially given Arun's comments as late as mid November.
There are 3 possible reasons for the current weakness:
1) Word is getting around that 4th quarter revenues did not meet expectations.
2) One or more institutional holders are selling.
3) A bad reaction by institutions to the sudden leaving of the CFO.
Unless, they preannounce revenues, I guess we'll have to wait
until Arun's presentation on 1/13 to get a better fix. Have to admit this weakness
Yesterday, the company announced that Arun will be presenting at the JPMorgan healthcare conference on 1/13/15 at 8:30am.
On 1/14/14, the day of the 2014 JPMorgan healthcare conference, Novadaq preannounced 4th quarter and full year revenues. The preannouncement allowed Arun to discuss those revenues when he made his presentation that morning.
During the 4th quarter of this year, Arun, on more then one occasion, and as late as late November, indicated that the company would meet it's overall 2014 revenue growth rate forecast of 40%. That would require 2014 revenues of at least $49 million. Given the fact that aggregate revenue for the first three quarters of 2014 was $33.6 million, the company will have to do revenues of $15.4 million in the 4th quarter. That would represent a 50% year over year increase in the 4th quarter and a 27% increase quarter to quarter. I believe everyone here would agree that those would be great numbers. So, let's hope for a preannouncement.
Short interest increased 428,000 shares to 3.659,000 shares for the period ending 12/15.
Bear in mind that the LifeNet health distributor agreement press release happened on 12/10.
The stock rallied dramatically on that news and continued up for the next two days. On 12/15, the stock declined substantially. Imho, that was the day this substantial increase in short interest happened.
Thanks for connecting the dots. Thanks also to Flamfurter for his comments. So, Arun waited until his team officially took over the marketing of Spy-Elite to pull this rabbit out of the hat. This new agreement had to have been in some form of development even prior to the settlement being reached with Lifecell. Remarkable!!
I love the conclusions you reach about marketing presence and price targets, but have to admit that I am having a problem connecting the dots of your posting. Any chance, when you have a free moment or two, to give it to me in a more expanded fashion.
Very nice day indeed. I wonder if this strong showing is the result of the LifeNet deal or is the result of the new patent announcement? The company must have felt very strongly about the importance of this patent because they rarely do a press release on patent approvals.
As I half expected, the recent drop in pps took us down far enough to fill the gap up that happened the day the company announced the Lifecell settlement. Arun's subsequent comments related to growth in Spy Elite not happening until the second half of 2015 was the catalyst to closing the gap up.
This stock is now now primarily owned by the institutions. Since there are only 55 million shares outstanding, all it takes is one or two institutions selling or buying to cause sharp swings in the pps.
Events that could cause a sharp increase in the pps is Japanese approval of Pinpoint. The same for China and maybe South Korea. The potential for acquisition always exist here. Otherwise, we're going to have to wait for 4th quarter results and more importantly what Arun forecast for 2015 growth. I am hoping that he indicates continued growth in the 40% range and increased gross margins. It also would be very helpful if he indicated that the company will begin to see quarterly profits sometime in 2015.
For the period ending 11/15, short interest spiked up 254 thousand shares to 3,538,000, a record high short interest position. This spike up probably caused by the large increase in the pps at the end of october because of the settlement announced with lifecell. What are these folks thinking? Do they believe that the marketing effort will fail?
Happy Thanksgiving to all here.
I should have expanded the message. While the overall number of shares owned by Institutions increased, overall it was the first bad quarter related to institutional ownership since I first bought shares in the company.
During the quarter there were 9 new institutional investors with an aggregate investment of 1.1 million shares. However, 22 institutions sold out their positions aggregating 5.2 million shares. The major offset to those sales of stock was the increased investment of Fidelity, which increased it's position by 3.5 million shares, and Janus which increased it's position by 2.9 million shares to 5.3 million shares.
Add to the above the Chase position and you now have 3 institutions who aggregately own 35% of the company. There is an obvious vulnerability there.
The day after the Lifecell settlement was announced the pps gaped up strongly. The day after the 3rd quarter CC in which after muttiple questions were asked and thoroughly answered about the Lifecell transition, the stock increased over a point. Since the company now will keep 100% of the revenue on Spy Elite sales the analyst increased their revenue forecast for 2015. Given how smoothly the transition was to take place, I believe that analyst concluded that revenues from Spy Elite would increase early in the year.
At the investor day presentations it was indicated by management that regrowth of Spy Elite would be seen no sooner then the second half of 2015. Analyst then adjusted their revenue projections and the stock began falling that day. Arun at Stiffel repeated the comment of Spy Elite regrowth commencing in the second half of 2015 and the slide in pps has continued.
One other point I tried to make a couple of days ago. Gap ups and gap downs when not supported by a fundamental change usually get filled. Yesterday we began filling that gap up caused by the Lifecell settlement. So, unfortunately, we could see a further pps decline down to about the $13.50 level.
Let me try th#$%$t #$%$g#$%$in.
One other possibility for the recent decline in pps is the old #$%$dd#$%$ge th#$%$t unless it is the result of #$%$ fund#$%$ment#$%$l ch#$%$nge, #$%$ll g#$%$p ups #$%$nd g#$%$p downs get subsequently filled. When the comp#$%$ny rele#$%$sed #$%$ st#$%$tement th#$%$t the Lifecell issue h#$%$d been settled, the stock g#$%$ped up #$%$nd opened #$%$t #$%$bout $14.32. We closed tod#$%$y $14.29. I hope it is not true but we could be on our w#$%$y to filling th#$%$t g#$%$p.
One other possibility for the recent decline in pps is the old w#$%$ll street #$%$dd#$%$ge th#$%$t unless it is the result of #$%$ fund#$%$ment#$%$l ch#$%$nge, g#$%$p ups #$%$nd g#$%$p downs usu#$%$lly get subsequently filled. As I write this we #$%$re closing in #$%$t where th#$%$t g#$%$p up occured when they #$%$nnounced the Lifecell settlement. We g#$%$ped up #$%$nd opened #$%$t #$%$bout $14.32 #$%$nd we just hit $14.40.
Let me bounce another possibility for the stocks decline off you. I'm assuming that you listened to the 3rd quarter #$%$. One impression that I walked away from the Investor day presentations was that the regrowth of Spy Elite was not going to begin happening until the 2nd half of 2015, while the #$%$ gave the impression that regrowth would commence earlier in the year. Any thoughts?
While I would agree that any patent can possibly be overturned, I was still shook up over that analyst comments. Since he mentioned Stryker, I went to their website where they list all of their products. Under the category " blood" they only list one small hand held machine which has nothing to do with fluorescent imaging. So at least from the perspective of Stryker this would be a green field activity. I then went and googled under fluorescent imaging equipment and found nothing other then our equipment indicated for blood.
I could be wrong but it looks like at the moment we are the only game in town by a long shot.
Thanks for such a comprehensive report and for getting up so early.
Since you have a very comprehensive and current insight into this company, was there anything or anythings mentioned that gave you pause. Anything that would cause the stock to decline by almost 8% on heavy volume. As the meeting progressed, any insight into the disposition of the analyst, i.e. upbeat, smiling, serious etc.
I listened to the entire presentation but my computer reception was erratic with the audio cutting in and out. Anyone else exdperience that problem?
From what I heard and saw, everything seems to be progressing well.
Why did the stock drop. Here are some possibilities
1) The recent runup had the RSI bordering at 70 indicating overbought.
2) One or more institutions were disappointed at the speed of progress
For example, some had hoped that all 30 Lunas would be installed at Serona by year end and I believe it will be spread out throughout 2015.
3) No earth shattering new news
4) All it takes is one institution to decide to sell down or sell out and you get a substantial move with no clear reason why.
Personally, I thought Management and the Speakers did a great job and it is obvious the company is gathering more and momentum. As with others here I was disappointed that the pps did not reflect this.