that is my thinking as well. the nice thing with allergy medicine - there are parts of the country where you'd sell it year-round. Even in those parts of the country where it wouldn't be year-round, it would be 2 or 3 seasons as opposed to really just one with the current lineup.
I agree with you about how the shares trade historically and that a few consecutive sells can easily knock it down a bunch. My GTC buy is in there at $1.55 - however, I promised myself that I will not be a cheapskate for a small price if it means missing out on something big. So, I'm purchasing a little bit on each step down and then tons at $1.55.
In the mean time, at least I will have a little, it won't bother me if it goes lower as I'll just keep nibbling. So I made my first purchase at $1.85 this week and will nibble a little more around $1.75, $1.65, and then pig out at $1.55. If the shares go up for some reason before then, at least I won't be kicking myself. I've had to kick myself a couple times this past week for having not purchased even a small amount in a couple companies when I should have. Lesson learned.
It works for me for a couple reasons:
My other similar bank BVA also just did a capital raise a few weeks ago. Their's was for $15 million. However, what they did was issue convertible preferred stock. Those preferred shares pay dividends at an initial 7% rate increasing to 9%. The conversion ability lets them convert to common shares at any point in the future 10,000 common shares for one preferred. They priced the preferred at $42,500 and the conversion price is $4.25/share - which was a few cents less than where the shares were trading at the time.
If they were going to raise money, and obviously if they are planning to make an acquisition they need to use cash and/or stock - so whether they issue stock now to get cash, or issue stock later to give to the acquired bank, there would be dilution. Wouldn't you agree?
The other option would be to issue debt. If there is a debt offering, then there's interest to pay on it and that is going to be an expense to the bank. In the BVA route, they chose an option that is equivalent to debt in that the bank will have to pay them interest, AND dilution in that those preferred shareholders can convert to common. The option BYBK chose entails no additional cost to the bank and will not be a drain on cash/earnings.
So, my view is that one way or another there would be dilution along the way. The way they've chosen to do it here is best in my mind - they all have more skin in the game, it is straight common stock so there's no dividend/interest payments.
Further, the shares are not in the float and trading - these folks are going to be holding their shares for the appreciation in price. So, as the miniscule float finds its way into strong hands, the shares are going to go way up in value.
BAY BANCORP, INC. RAISES $7.0 MILLION TO SUPPORT ITS GROWTH
LUTHERVILLE, MD – May 16, 2014 – Bay Bancorp, Inc. (NASDAQ: BYBK) (the “Company”), the parent company of Bay Bank, FSB, Lutherville, Maryland (the “Bank”), announced today that it has completed a sale of shares of its common stock under a private placement with its majority shareholder, Financial Services Partners Fund I, Directors and other members of the Executive Management team. The Company sold 1,422,764 shares of common stock at $4.92 per share, the closing bid price on May 14, 2014 as reported on The NASDAQ Capital Market, for aggregate gross proceeds of approximately $7.0 million.
“We are very pleased with the support of our lead investor, Directors and Management to raise $7 million in additional common equity to support the growth of the Company,” stated Joseph Thomas, Executive Chairman of Bay Bancorp, Inc. and Bay Bank FSB. “A strong balance sheet is critical in the banking industry today to serve the needs of our current customers and to pursue future expansion and bank acquisitions. Bay Bank is well positioned in terms of management, branch distribution and financial solutions to become the leading local, community bank in the Baltimore/Washington market,” added Thomas.
keep an eye on things folks - shares may not go as low as we suspect, or would like to be able to pick up more cheap shares.
$1.84 ... 30,134 ... NDD ... 16:00:48
$1.85 ... 100 ... BATY ... 15:48:47
$1.85 ... 100 ... BATS ... 15:08:56
$1.85 ... 100 ... BATS ... 15:04:59
$1.85 ... 34 ... NSD ... 15:04:51
$1.85 ... 1,200 ... NSD ... 15:04:51
$1.85 ... 500 ... NSD ... 15:04:51
$1.85 ... 700 ... ARCA ... 15:04:51
$1.85 ... 27,900 ... NSD ... 15:04:51
$1.85 ... 500 ... NSD ... 15:04:51
This is very interesting. Something may be up.
$1.8539 ... 76,633 ... NDD ... 16:02:10
$1.8496 ... 1,700 ... NDD ... 15:57:41
$1.85 ... 200 ... BATY ... 15:53:30
$1.85 ... 10,800 ... NSD ... 15:53:15
$1.85 ... 1,500 ... NSD ... 15:53:15
$1.85 ... 10,700 ... NSD ... 15:53:15
$1.85 ... 1,500 ... NSD ... 15:53:15
$1.85 ... 24,500 ... NSD ... 15:53:15
$1.85 ... 1,000 ... NSD ... 15:53:15
$1.8499 ... 800 ... NDD ... 15:52:50
$1.85 ... 800 ... NDD ... 15:52:50
$1.8498 ... 800 ... NDD ... 15:52:50
$1.8499 ... 800 ... NDD ... 15:52:50
$1.8499 ... 300 ... NDD ... 15:52:50
$1.85 ... 200 ... NDD ... 15:52:50
$1.85 ... 300 ... NDD ... 15:52:50
$1.8499 ... 200 ... NDD ... 15:52:50
I've taken the time to go through the 10Q.
1. As I mentioned in my previous post, there was a breach of the $12M tangible net worth requirement. Lender has amended the agreement lowering to $10.25M
2. Company is confident they have sufficient cash/resources for the remainder of the year.
3. Sales for the quarter were the highest in quite a while
4. The only reason for the $1M loss was in income taxes due to biting the bullet now on their deferred tax valuation allowance. Operating loss of only $217k was the best in over a year - last better was Sept 2012 quarter just after company began posting losses.
5. If you look at the balance sheet, there is clearly a buildup of inventory taking place. I believe this goes in hand with the jump in sales we see this quarter...they are planning for higher sales going forward. Inventory has been pretty tightly managed over the past year, so the buildup is noteworthy and indicative that there are higher sales coming.
6. Assuming somewhat higher sales, better control on the cost of production for SQL, and normal tax rates, the company will show operating profit within the next one to two quarters, and bottom line profitability during 2014.
I am now beginning to load up.
I suspect that there may be insider purchases coming very soon...this will simply confirm that there is a light at the end of the tunnel.
Regardless how incompetent Feltl is, they should be putting together a research report on ELMD now to review the quarter and justify their $2.75 price target.
I think something is in the works. What other reason is Miller buying the amount of shares he is with such frequency? He is increasing the number of shares bought each time, and he is buying as the shares move higher. Regardless, this is a very positive sign.
Miller buys 6740 shares @ $20 on 5/13
Baker buys 400 shares @ $20 on 5/13
Also, almost forgot - Kevin did spend an extra minute on Slide 10 with the stock price history. He's well aware of the situation and attributes it to the financials being too complex for the market to currently understand as a result of the merger...but he indicated that's how the accounting standards require it. He was very confident as things progressed towards end of the calendar year and they have comparable year over year results, things will become easier to understand - implying market should provide better valuation of the shares.
Not too much to report.
First they got the standard business/voting out of the way. Then Kevin went through the slide presentation. You can go download from the SEC website - they uploaded it this afternoon.
Slide 26 in there is the Strategic Vision, and very first bullet is to get to be a $1 to $1.5 billion bank through organic growth and acquisition.
citnitout - Hovde did not make it, but Joe Thomas led the meeting aside from Kevin's slideshow. Joe praised all of them individually and as a group for the great job they're doing. He says he meets with them regularly day to day and sees the hard work and great results.
A couple side notes:
- closed 2 branches in April ... I'm guessing may be some charges coming for that this quarter. Kevin indicated the leases were up anyhow so they needed to basically make a 10 year decision if they renewed and decided not to.
- getting out of IRA business - too much work, not enough return
- dropped current wealth management relationship, entered into a new one with local group
- looking to create some type of product(s) specific to healthcare market - pointing to Slide 14, noting most of the top employers in the region are healthcare/medical-related.
Personally, I was glad I went - even considering it was a 3.5 hour drive for me each way and the meeting was just 1 hour. It was good to meet all of them. They are extremely personable and just good/knowledgeable people. Mark Caplan came in just as things were starting, sat down next to me and immediately introduced himself.
These are all good guys - all the officers and directors.
I'll definitely be purchasing more shares as long as they're trading below $5.00
Loan requirement may have been breached
"1. Borrower must maintain a Minimum Tangible Net Worth of not less than $12,000,000.00."
If I'm looking at the correct entries on the balance sheet, I'm coming up with something in the neighborhood of $11.4 million, down from $12.4 million at Dec 31.
I am adamant that there has to be other products to take care of the three other quarters of the year. they don't t even need to be blockbusters - just some thing(s) to diversify and smooth out sales/profits throughout the year. go buy something if you have to just to have something else. again, how about allergy medicine for spring/summer/fall - that would help lots to smooth things out.
Lousy earnings report.
No excuses Ted - you have a one product, one season company. If you do not diversify into more products, you will never deliver the long-term sustainable growth you speak of.
Whether it's Dutchess sitting on the bid at $1.95 or not - the shares will go lower over the next couple months.
Shares were trading at $1.73/$1.74 for the entire final hour and then right before the close this is what he does:
16:00:00 ... $ 1.68 ... 100
15:59:59 ... $ 1.68 ... 100
15:59:34 ... $ 1.70 ... 100
15:59:01 ... $ 1.70 ... 100
15:59:00 ... $ 1.70 ... 100
15:58:56 ... $ 1.70 ... 100
15:58:51 ... $ 1.70 ... 100
15:58:45 ... $ 1.69 ... 100
15:58:38 ... $ 1.70 ... 100
15:58:38 ... $ 1.74 ... 200
15:58:38 ... $ 1.74 ... 100
15:53:39 ... $ 1.73 ... 1,000
15:53:39 ... $ 1.73 ... 1,300
15:50:49 ... $ 1.74 ... 100
15:50:49 ... $ 1.74 ... 200
As you can see, in the last minute, just a few 100 share sells takes the price from $1.74 to $1.68 and then he closed it at $1.67 with this:
$1.67 ... 1,884 ... AMX ... 16:01:07
Oh well, the games can only last so long. Looks like we have earnings next week, and then the B. Riley conference the following week.
What's gut-wrenching is that ITI is not getting the recognition or valuation it deserves. I know what others in this space are doing (i.e. ISNS and BFDI) and they are failing miserably, posting losses, falling sales, and have garbage balance sheets. Here we have a company with everything going for it performancewise, and strength of the business and balance sheet. They are doing all the right things. At some point either the market will have to give the appropriate valuation, or some other company is going to come along and do it.