GEO Investing

Call(s) to Action:

NEWL ($4.41, halted pre market) –  We have been in contact with some investors who are looking  at NEWL as a potential short opportunity.  Shares skyrocketed more than doubling in yesterday’s trading session. The stock was actually up 33% in pre-market trading and has since been halted by the NASDAQ.  Investors are interpreting the following developments as good news.

  • Settlement of 45 million of indebtedness through a debt/equity exchange with Hanover Holdings
  • The company is suing its largest investor (Ironridge Global) for over $100 million surrounding what it believes to be unauthorized conversion of debt to equity.
  • Investors are likely assuming that the company will be in a better position to grow the company,due to a reduced debt burden.

Bearish Case From Some Investors:

  • Appears the company is near insolvency even after the debt/equity exchange.
  • They assume Ironridge wants to sell its around 1.6 million post-split shares.
  • Ironridge was a key financier in the LLEN story.  Recall we were integral in getting LLEN halted and delisted.
  • The company has executed at least 5 reverse splits over 4 years to maintain its share price over a $1.00 to remain listed on the NASDAQ.The most recent was a 1-for-50 on 7/15/2014.
  • It is worth noting that the stock has plummeted after every prior reverse split.
  • Needs to raise capital.

Keep in mind this is a dangerous short due the company having only around 6.5 million shares outstanding.

OINK ($2.15) – Announced new strategic plan and acquisition of new business.  OINK will issue 1 million shares, where the full release of shares are dependent upon the acquiring company achieving net profits of RMB 4.5 million, RMB 9.0 million, and RMB 15.0 million for the years ending December 31, 2014, 2015, and 2016, respectively.

Here are the other stories that the GeoTeam is following today… (Please see full disclosures at bottom)

  • ChinaHybrids

    • NHTC ($8.12) – Seeking Alpha article calls for 55% upside.
    • BONA ($7.03) – Wall Street Journal highlights recent investment of Fosun Group in BONA.
    • NORD ($19.55) – Reports Q3 results; Reported a 54% increase in revenues and non-GAAP EPS of $0.15 vs $0.07 (estimate of $0.21). FY14 revenue guidance of $468 to $472 million, in-line with analyst estimates of $470 million
  • GeoBargains/GeoBargains on the Radar
    • Coding CTEI ($0.97) as a GeoBargain on the radar.  Announced new orders of over $7 million.

For more timely information, particularly during the daily trading session, we urge our members to read our message board posts daily.

Disclosure: Long NHTC ; Other Long Positions; Other Short Positions; Pump & Dump Positions (Password GEO2014)

Summary of general highlights:

On the Asian Front…

Tianli Agritech(NASDAQ:OINK)($2.15) – a leading producer of breeder hogs, market hogs and black hogs headquartered in Wuhan City, China, today announced a strategic development plan (the “New Strategic Plan”) to transform the Company into a higher growth, more profitable business through targeted investments and acquisitions.

“Building on Tianli’s status as a Nasdaq-listed public company with a strong balance sheet and the current management team’s deep knowledge and experience in managing a wide array of businesses across different industries, the New Strategic Plan aims to transform Tianli from a single revenue stream – hog farming to a well – diversified company through targeted investments and acquisitions in selected high-growth industries such as equipment manufacturing, optoelectronics, new material & new energy products, electromechanics and healthcare devices.

In connection with the Strategic Development Plan, the Company also announced that it had consummated a stock purchase agreement (the “Stock Purchase Agreement”) whereby it acquired an 88% equity interest in Hubei Hang-ao Servo-valve Manufacturing Technology Co., Ltd. (“Hang-ao”) for: 1) cash consideration of RMB 42 million (approximately US$6.8 million), paid to Youbin Li and Hongwen Tong who collectively controlled 60% of the equity in Hang-ao; and 2) up to 1,047,000 shares of Tianli common stock (the “Share Consideration”), par value of $0.001 per share, to be issued to certain management shareholders who transferred to Tianli 28% of the equity in Hang-ao. Vesting of the Share Consideration is contingent upon Hang-ao achieving certain agreed upon net profit targets. Specifically, the entire Share Consideration will only vest in the management stockholders if Hang-ao achieves net profits of RMB 4.5 million, RMB 9.0 million, and RMB 15.0 million for the years ending December 31, 2014, 2015, and 2016, respectively. As a result of the completion of the transaction, Hang-ao became an 88% owned subsidiary of Tianli’s WFOE subsidiary, Wuhan Aoxin Tianli Enterprise Investment Co., Ltd. (previously known as Wuhan Fengxin Agricultural Science and Technology Development Co., Ltd.)(“WFOE”). Wuhan Fengze Agricultural Science and Technology Development Co., Ltd., the Company’s wholly-owned operating subsidiary for its hog farming business, will remain under WFOE, in parallel with Hang-ao.”

Ping Wang, Chairman and Chief Executive Officer of Tianli, commented,

“The New Strategic Plan we are announcing today stems from the new management team’s close collaboration with the Board of Directors to reposition Tianli for consistent and profitable growth through targeted strategic investments and acquisitions. Thanks to our much improved cash position following our recent private placements, we are able to jump start this multi-year New Strategic Plan with the acquisition of Hang-ao, an emerging electro-hydraulic servo-valve manufacturer with a strong patent portfolio and an impressive management team. We expect Hang-ao to contribute significantly to us following the transaction. Looking ahead, we are very excited about the prospect of our businesses and plan to aggressively seek M&A targets to drive growth and profitability and enhance shareholder value.”

Nord Anglia Education (NYSE:NORD) ($19.55) – NORD operates premium schools worldwide. It operates approximately 27 schools, including 6 schools in North America, 9 schools in Europe, 7 schools in the Middle East and Southeast Asia, and 5 schools in China. The company reported its results for third quarter 2014:

  • Revenue increased 54.9% from $89.4 million last year to $138.5 million this year.
  • Non-GAAP EPS of $0.15 this quarter vs $0.07 in prior year.

Quotes from management:

“We are pleased to report strong operating and financial results for the third quarter of fiscal 2014, which demonstrate the continuing success of our organization,” said Andrew Fitzmaurice, Nord Anglia Education CEO. “Our focus on delivering outstanding educational quality enables students to achieve academic, social and personal success and our students’ standardized examination results continue to exceed UK and global averages.  We have recently received our students’ International Baccalaureate Diploma results for 2014 and our average diploma score has risen again, to 33.7 points from 33.0 points in 2013, which is significantly ahead of the global average of 29.8 points.”

“We continue to strengthen our market leading position as we execute our growth strategy, and the acquisition of Northbridge International School Cambodia on July 10, 2014 is the most recent example of this.  In June, we also celebrated the ground breaking of the British School of Chicago’s second campus, which is scheduled to open in September 2015 with 1,100 seats of capacity.  We are now looking forward to the start of the new school year in September 2014 and are particularly excited about the opening of our two new greenfield schools in Hong Kong and Dubai,” Fitzmaurice continued.

The company also reiterated certain financial targets regarding the fiscal 2014 expectations:

  • Overall revenue in fiscal 2014 in the range of $468-$472 million.
  • Adjusted EBITDA in fiscal 2014 in the range of $125-$127 million.

GeoBargain/Specials…

Cemtrex Inc. New (BB:CTEI) ($0.97) –  CTEI is an environmental technologies company, manufactures and sells instruments for emissions monitoring, process analysis, instrumentation, and controls for industrial applications and compliance with environmental regulations.  CTEI announced new orders totaling over $7 million.

Quote from management:

“Cemtrex’s various sales and marketing teams are executing at a high level and continue to find opportunities in the market. We are excited to see such strong demand for our products and services as we look to build on this recent momentum.”

In our 5/21/2014 email we highlighted CTEI’s strong Q2 2014 results and bullish management commentary as well as a bullish Seeking Alpha article from 5/15/2014 titled, “Cemtrex Acquisition Of ROB Could Unlock Significant Value”.

We are coding CTEI as a GeoBargain on the radar at $0.97.

For more timely information, particularly during the daily trading session, we urge our members to read our message board posts daily.

Sincerely,

The GeoTeam