haha - all true. but the daily price action doesn't bother me as long as it's only a couple hundred thousand shares...just traders doing their thing.
Seems like a blowout quarter! That said, am somewhat new to LOCK...how do folks think about churn? Back of the envelope suggests it's been around 15% per year, which seems counter intuitive for a product you'd expect people to keep for a while. Is this just free memberships rolling off?
Not in EIGI, but I don't think this analysis is correct. 1) Fewer days of working capital is not a bad thing by itself. It can be a sign of capital efficiency. 2) EIGI generates 150MM of FCF. It's highly levered, but certainly not technically bankrupt by any means. In fact, it's probably not even close to defaulting on covenants. 3) This is an LBO rollup capital structure. The goodwill/intangibles discussion is meaningless (purchase accounting can muck everything up in a roll up...why would you eliminate intangibles???)...without deeper understanding of past acquisitions. It's a growth / cash flow generation story. Either that, or Accel Partners, KKR, Warburg Pincus, and Goldman Sachs PE are all lucky idiots...
Stuart - I think they may simply feel that Ebix has certain qualities that make it a good component of a diversified short portfolio in a hot market. Signs of smoke, skittish investors etc (though it is obviously not expensive relative to many other co's out there). I do find the risk-reward perplexing. They have 300m of exposure...not peanuts.
agreed. that said, LFCF yield is hard to find these days and brands are fixable. may look into this a bit more.
I've talked about this company with shorts, longs, and a variety of hedge fund w/o positions. The shorts aren't dumb...they just have a different opinion.
I don't think management would want their share price to soar just for the sake of a short squeeze. That's an unsustainable high that will churn their shareholder base yet again (most of us would sell). Heck, I'd short it from the top of a squeeze. They are hopefully focused on the business and winning clients, and yes, they absolutely need to do more to get analyst coverage, but that doesn't happen overnight. I've relayed to IR that this is a huge point (as has Stuart, and probably a ton of other folks here). The more people that let them know, the better the odds of them acting on it. Hopefully they are planning an analyst day or some sort of presentation to the street. As for the shorts, if they believe their thesis this is still an attractive short. There's still plenty of "smoke", it's a confusing industry and technology, and the market is generally pretty hot. Either a market catalyst or a company catalyst could get them great value here.
There have been smart people on both sides of many names (HLF). The shorts not covering doesn't scare me...but certainly makes me think hard about why I am long, which is a good thing (certainly would not be the first time for an ebix investor:)).
Is there any proof that the day-to-day movements are actually related to the "big" shorts? It seems more like traders doing their short-term (1 day, 1 week) routines. Not a lot of value or logic for the big shorts to be playing with price with the first 100k of volume each day. Not to mention wash trades are blatantly illegal and not so hard to trace right?
fair enough - I guess I think of PR and IR as separate...would much rather they focus on the IR. Nuanced b2b businesses in opaque markets like insurance fitech are never going to have great PR because no one understands what they do!
Just one man's opinion, but I am not big believer in the PR issue. I think new customer wins, solid acquisitions and analyst coverage are the keys to attracting institutional investors and should be the focus. PR alone won't attract higher quality investors...it will just lead to the same unsophisticated retail frothiness that made EBIX a great short target in the first place. For this stock to re-rate and get a big valuation, EBIX should focus on growing the business, not the PR effort. Analyst coverage is also a must.
Still 10m shares shorted...so we are talking about 9 figures. I wouldn't call them scavengers. Also, one of the guys who appears to be involved used to run the largest short-focused hedge fund and successfully uncovered more than one fraud over a multi-decade career. I'd actually say that my main concern at this point is that smart people who have done this before continue to remain short.