Guest MarkS Posted March 29, 2016 Share Posted March 29, 2016 I've recently started a position in TIGR. The company is in the process of selling assets and liquidating. It had two lines of software,: Postano and Omnis. They just sold Postano for 2.4 M (net 1.9M) and are in negotiations to sell Omnis. The market cap is about 7.6M. Adjusting for the sale of Postano, I'm figuring that they will have about 8.6M in net cash. I have no idea what they will receive from the remains assets. They have Omnis (estimate 2M), real property in England (estimate 300k to 400k), a corporate shell (estimate 100k to 500k) and net loss carryforwards of maybe 40M. My estimates are little more than guesses. My downside appears limited and could present a decent profit - assuming their business affairs can be wrapped up in the next 12 to 18 months. TIGR has a long history of disappointing shareholders. However, this does appear to be the end of the line for them. Thanks Mark Link to comment Share on other sites More sharing options...
valuedontlie Posted April 14, 2016 Share Posted April 14, 2016 This seems like a pretty straightforward liquidation play... What I like most is that there is virtually no interest from the rest of the board... I think your estimates seem reasonable... Depending on how far along they are on disposing of the remaining operating business (Omnis), this could reasonably be wrapped up by yearend. It won't seem "fun" holding this security in an up-trending market but prospects look quite good at this price. Link to comment Share on other sites More sharing options...
Guest MarkS Posted April 14, 2016 Share Posted April 14, 2016 Thanks valuedontlie, My posts are often lonely places. It's nice to see the occasional friendly face. Mark Link to comment Share on other sites More sharing options...
writser Posted April 14, 2016 Share Posted April 14, 2016 By all means keep posting - the lack of replies should strengthen your conviction, if anything. TIGR looks interesting at first glance. Spent a little amount of time on it. How did you arrive at the $2m Omnis valuation, I'm guessing this is ballpark based on the Postano sale? I think your pro-forma net cash is a bit optimistic - according to the proxy filed 2/19 they have 8.4m cash pro forma and they probably burned through a bit the past quarter. Somewhere around 7.5m seems more reasonable. The main thing that worries me is that G&A was 6m last year, adjusted for the Postano sale. Looks like that number was inflated a bit due to severance expenses and legal and financial services. But even if it drops down to 4m or lower it will present a significant clock if they don't manage to liquidate quickly. An interesting point is that the ex-CEO who owns 48% stated last year in the 10K that he wanted to sell his stake (at higher prices). Good thing is that he probably wants to preserve cash - bad thing is that despite that the company has been burning ~ $1m / quarter since. Looks like he is trying to leave the sinking ship but isn't finding buyers - which makes me a bit hesitant to buy this. My ballpark calculation: + 7.5m in cash at FY '15 end + 2.5m Omnis sale (including real estate) - 2m cash burn during the rest of the year (assuming they sell somewhere late in this year) = 8m or ~26 ct liquidation value in a year. Doesn't look too attractive to me but there is some upside left in the corporate shell + NOL's. Wouldn't put too much value on that though - you need good capital allocators to make use of that and these guys don't seem too impressive at first glance. Also, I'm no expert on NOL's but as far as I know you cannot just sell the shell company including NOL's - there are restrictions based on changes of ownership. Link to comment Share on other sites More sharing options...
Guest MarkS Posted April 14, 2016 Share Posted April 14, 2016 Hi Writser, Thanks for the pity post. The 2M for Omnis is in fact based on the Postano sale. I'm not a CPA. I know just enough accounting to be dangerous to myself and others. Having said that I don't see the deferred revenue as an actual cash charge in any sort of liquidation scenario. In fact I suspect that almost all of their current liabilities must go with the purchaser. So I'm fairly comfortable with my cash estimate - at least for the moment. However, you're absolutely correct about the clock ticking. Expenses do grind on relentlessly. Perhaps I should revise my estimate. Another positive is that the current president is moving to Sprinklr. So I'm hoping - always a scary word - that the GA expense will come down significantly. Seriously though - thanks for the imput. Link to comment Share on other sites More sharing options...
valuedontlie Posted April 15, 2016 Share Posted April 15, 2016 Capital allocation is not a factor in this scenario... the company intends to liquidate as soon as practicable... It does appear that the company could be burning roughly $800k per quarter or more so nearly $1m burned through April potentially... This number could be way lower today, pro-forma for Postano sale total opex is down almost 40% YoY thru 12/31/15... The way I look at it, company has $8.4m cash pro-forma for Postano sale, should that get to $9m through sale of property + other assets and assuming Omnis is sold at a price that merely offsets cash burn, then this could reasonably liquidate near $0.29/share... I view downside as nil-to-minimal assuming they get something for Omnis... Link to comment Share on other sites More sharing options...
Guest MarkS Posted April 15, 2016 Share Posted April 15, 2016 Decent news this morning. TIGR announced a .13 cent per share special dividend payable May 7, 2016. Thanks Mark Link to comment Share on other sites More sharing options...
writser Posted April 15, 2016 Share Posted April 15, 2016 Capital allocation is not a factor in this scenario... the company intends to liquidate as soon as practicable... It does appear that the company could be burning roughly $800k per quarter or more so nearly $1m burned through April potentially... This number could be way lower today, pro-forma for Postano sale total opex is down almost 40% YoY thru 12/31/15... The way I look at it, company has $8.4m cash pro-forma for Postano sale, should that get to $9m through sale of property + other assets and assuming Omnis is sold at a price that merely offsets cash burn, then this could reasonably liquidate near $0.29/share... I view downside as nil-to-minimal assuming they get something for Omnis... Allow me to play devil's advocate. There's a lot of 'coulds', 'shoulds' and 'intends' in your analysis. Todays dividend arrived fast but is suspiciously low if they have a $8m+ cash balance and slashed expenses. If they don't find a buyer quickly I definitely see downside. I actually agree with both of you that this looks like an interesting situation but I don't think you've outlined the worst case scenario. The 48% holder (and ex-CEO) has been trying to get rid of his stake for a while but the company is bleeding cash. I don't think that was part of his game plan. That said I'll keep an eye on this and wish you both good luck. Link to comment Share on other sites More sharing options...
Guest MarkS Posted April 15, 2016 Share Posted April 15, 2016 Thanks Writser, You can "play devil's advocate" anytime you want. You bring up good points. I actually see the distribution, and amount, as a positive. So we differ on that point. Thanks Mark Link to comment Share on other sites More sharing options...
wabuffo Posted April 15, 2016 Share Posted April 15, 2016 Todays dividend arrived fast but is suspiciously low if they have a $8m+ cash balance and slashed expenses. In my experience, it is an encouraging sign. There may not be a lot of upside at current prices, but it shows management confidence that the sale of their other business/assets are going well and/or opex losses and contingencies can be ring-fenced. Capital efficiency in these liquidations is very important to maintaining good risk-adjusted returns (with so little upside possibly likely). It's good to see mgmt moving with haste to get cash out the door and into shareholders' hot little hands. wabuffo Link to comment Share on other sites More sharing options...
Guest MarkS Posted April 15, 2016 Share Posted April 15, 2016 I also think the early payout has another benefit. Assume for the sake of argument that the total return is .29 cents per share. I bought at 24.5 cents on average. So my expected return is 4.5 cents per share. Wth the rapid return of the .13 cents my profit margin increased significantly as I will only have .115 cents at stake to make the expected 4.5 cents. This is the same logic as Pupil used in his SOR trade. Thanks Mark Link to comment Share on other sites More sharing options...
benhacker Posted April 15, 2016 Share Posted April 15, 2016 Mark, that is what Wabuffo was saying when he said "capital efficiency"... Link to comment Share on other sites More sharing options...
Guest MarkS Posted April 15, 2016 Share Posted April 15, 2016 Well - egg on my face. Link to comment Share on other sites More sharing options...
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