Q: Hi,
In one day up 45% (short squeeze?), finishes the day up 24%, then the next day tanks 15%...almost ending up at the same share price before the 20% sale.
What gives?
Can you suggest a valuation?
What is the chance this thing gets back to $20?
In one day up 45% (short squeeze?), finishes the day up 24%, then the next day tanks 15%...almost ending up at the same share price before the 20% sale.
What gives?
Can you suggest a valuation?
What is the chance this thing gets back to $20?
5i Research Answer:
CIX announced a sale of part of its US division which initially looked great. But then it revealed the nextday that the terms of the preferred shares change if the company does not complete a US IPO. If there is not an IPO in three years preferred shares get much more (at the expense of common shareholders). This of course should have been disclosed first, and shareholders essentially got hoodwinked here, so there was an 'anger' effect as well as financial. Still, the terms of the deal motivate CIX to continue to bring out value. We think it could eventually get back to $20, with some co-operation from the overall market. A US IPO would bring out more value and reduce debt, which has been a drag on shares.