Yes, I know I said I would discuss REFR's presentation at the Long Island Investor's Conference last week, but frankly, no one I've talked to has had anything to say about it, and I haven't gotten around to listening to it for myself. Whatever they said seems to have attracted some tepid interest based on the subsequent price action, but with Stark Investments sitting there taking whatever they can get for their mountain of shares, this thing is not going anywhere fast anyway.
But meanwhile, one of REFR's more infamous cohorts, Thermoview Industries, filed for Chapter 11 bankruptcy earlier this week. Thermoview was the architect of the "rollout" in 2002 into which REFR founder Bob Saxe sold a significant chunk of stock. To this day Thermoview carries a link to a page describing "AlterLite" windows based on SPD, but apparently sales from that miracle product weren't enough to turn the tide for the struggling home improvement company.
This, coupled with Infinitint (f/k/a Razor's Edge and SPD Technologies) appearing to have repackaged itself once again, this time as PrivaSee Glass, selling a decidedly non-SPD-based product, and the decline of the REFR "empire" is becoming more and more evident by the day.
Wednesday, September 28, 2005
Thursday, September 15, 2005
Get thee to the small cappery!
In a rather unexpectedly swift rendering of judgment, the NASD has denied REFR's appeal of its delisting from the Nasdaq National Market to the Nasdaq Small Cap exchange, less than four weeks after the company announced the filing of its appeal.
In past years, the delisting process would often take months. One possible explanation is that the NASD has suddenly gotten much more efficient. This is a little iffy, but strictly speaking, the NASD is not a governmental body, so it's just barely possible that they've allowed some efficiency improvements to creep into their system.
Regardless, there seems little scope for there to have been a great deal of deliberation over this appeal. Was it that REFR's case for continued listing was so weak that it got laughed out of the room? Or did they not even try to make a case, but rather simply filed an empty appeal as a naked attempt to stall for time. If the latter, it doesn't seem to have worked very well.
This comes at an inconvenient moment for REFR, what with their plans to make their pitch to the Long Island Investor's Conference next week. The distinction between National Market and Small Cap may be all but transparent these days, but it will still be one more embarassing issue, out of an extremely long string of them, Joe Harary may have to contend with. Assuming he even opens the floor to questions.
But at any rate, that's for next week. REFR has promised the whole thing will be recorded and kept for posterity's sake, so stay tuned. We may actually have something to talk about again!
In past years, the delisting process would often take months. One possible explanation is that the NASD has suddenly gotten much more efficient. This is a little iffy, but strictly speaking, the NASD is not a governmental body, so it's just barely possible that they've allowed some efficiency improvements to creep into their system.
Regardless, there seems little scope for there to have been a great deal of deliberation over this appeal. Was it that REFR's case for continued listing was so weak that it got laughed out of the room? Or did they not even try to make a case, but rather simply filed an empty appeal as a naked attempt to stall for time. If the latter, it doesn't seem to have worked very well.
This comes at an inconvenient moment for REFR, what with their plans to make their pitch to the Long Island Investor's Conference next week. The distinction between National Market and Small Cap may be all but transparent these days, but it will still be one more embarassing issue, out of an extremely long string of them, Joe Harary may have to contend with. Assuming he even opens the floor to questions.
But at any rate, that's for next week. REFR has promised the whole thing will be recorded and kept for posterity's sake, so stay tuned. We may actually have something to talk about again!
Thursday, August 11, 2005
R&DD
The latest REFR gambit being flogged on the boards stems from an article in the Billings (Mont.) Gazette regarding Volkswagen's research and development work on SPD shading in windows. The article references an experimental Touraeg... Torueag... Toerag... that new SUV model, with windows that can change from a clear state to a dark state yada yada yada we've heard all this before.
Oh, and someone found a video which mentions just about everything the VW research center is working on, including, if you sit through enough of it (I had to resist the urge to click the back button when the Segways showed up), the switchable windows.
Okay, first of all... Billings, Montana? As best as we can tell, this appears to be the only newspaper in the country to pick up this story. Can it be that the rest of the country has already been saturated with "first impressions" of SPD?
Secondly, this represents no advancement at all for SPD. The big Setra rollout that ultimately went nowhere for REFR and SPD Inc. is several steps down the road from where SPD is with Volkswagen. Even if this was destined to be SPD's long-awaited big breakthrough, it's several years and at least one significantly dilutive refinancing away from bearing fruit from REFR.
But none of this matters to the people that uncovered this little nugget. It's become clear that finding "something new" has become its own reward, and that actually evaluating the information is something best left to the pedants.
That is what passes for "due diligence" these days.
Oh, and someone found a video which mentions just about everything the VW research center is working on, including, if you sit through enough of it (I had to resist the urge to click the back button when the Segways showed up), the switchable windows.
Okay, first of all... Billings, Montana? As best as we can tell, this appears to be the only newspaper in the country to pick up this story. Can it be that the rest of the country has already been saturated with "first impressions" of SPD?
Secondly, this represents no advancement at all for SPD. The big Setra rollout that ultimately went nowhere for REFR and SPD Inc. is several steps down the road from where SPD is with Volkswagen. Even if this was destined to be SPD's long-awaited big breakthrough, it's several years and at least one significantly dilutive refinancing away from bearing fruit from REFR.
But none of this matters to the people that uncovered this little nugget. It's become clear that finding "something new" has become its own reward, and that actually evaluating the information is something best left to the pedants.
That is what passes for "due diligence" these days.
Wednesday, August 10, 2005
The receivables conundrum
My general disinterest in REFR's most recent quarterly report notwithstanding, one item of interest has come to light, even if it more of a curiosity than anything else.
For the first half of 2005, REFR has recorded revenue of $78,242. Over the same six months, REFR's accounts ("royalty") receivable has increased by $110,750. Now, for those not familiar with accounting practices, receivables are money the company has earned but not yet been paid. They are recorded as revenue, but are carried as a non-cash asset on the balance sheet.
But if receivables have increased by over $110,750, how is it that there isn't at least that much in revenues? Did REFR somehow have negative payments from its customers?
The answer appears to be in the "deferred revenues" line of the balance sheet. In the past six months, deferred revenues have jumped from $10,000 to $90,000. Deferred revenues are, in a way, the opposite of receivables, in that they represent money paid to REFR but not yet earned by the company. So, reducing the increase in receivables by the increase in deferred revenues, the increase in receivables drops to $30,750, which is at least within the realm of mathematical possibility.
Mind you, it is widely considered a red flag by company watchers when receivables increase faster than revenues. Of course, in REFR's case, revenues aren't increasing anyway. Besides, what is one more red flag among in a company with so many you'd think it was the Chinese embassy?
For the first half of 2005, REFR has recorded revenue of $78,242. Over the same six months, REFR's accounts ("royalty") receivable has increased by $110,750. Now, for those not familiar with accounting practices, receivables are money the company has earned but not yet been paid. They are recorded as revenue, but are carried as a non-cash asset on the balance sheet.
But if receivables have increased by over $110,750, how is it that there isn't at least that much in revenues? Did REFR somehow have negative payments from its customers?
The answer appears to be in the "deferred revenues" line of the balance sheet. In the past six months, deferred revenues have jumped from $10,000 to $90,000. Deferred revenues are, in a way, the opposite of receivables, in that they represent money paid to REFR but not yet earned by the company. So, reducing the increase in receivables by the increase in deferred revenues, the increase in receivables drops to $30,750, which is at least within the realm of mathematical possibility.
Mind you, it is widely considered a red flag by company watchers when receivables increase faster than revenues. Of course, in REFR's case, revenues aren't increasing anyway. Besides, what is one more red flag among in a company with so many you'd think it was the Chinese embassy?
Monday, August 08, 2005
Giving shareholders no quarter
With the release of second quarter results (via 10-Q, as per usual), REFR has given shareholders a good idea of just what it intends to do with the $5 million dollars it raised last February.
That is to say, they intend to continue their policy of collecting paychecks, as SPD technology collects dust, while making a handful of purchases of stock just to give the marks a cue to follow.
Second quarter revenues of $36,992 are down from the same quarter last year, while the net loss is lower due to a cut in "research and development" expenditures. But who cares. Bottom line, another million in cash was burned, give or take a hundred thousand, leaving them with a bit over five quarters' cash left (as of June 30th). Meaning, the proxy to increase the share authorization by another couple million (because just one million shares at this price level will be a waste of time) should show up just about any time now.
Really, the biggest accomplishment for the quarter was a 30% decline in the share price, to multi-year lows. And even then, the legwork on that was accomplished the quarter before (in the form of the issuing of the shares for the aforementioned fundraising).
Move along, there's nothing to see here.
That is to say, they intend to continue their policy of collecting paychecks, as SPD technology collects dust, while making a handful of purchases of stock just to give the marks a cue to follow.
Second quarter revenues of $36,992 are down from the same quarter last year, while the net loss is lower due to a cut in "research and development" expenditures. But who cares. Bottom line, another million in cash was burned, give or take a hundred thousand, leaving them with a bit over five quarters' cash left (as of June 30th). Meaning, the proxy to increase the share authorization by another couple million (because just one million shares at this price level will be a waste of time) should show up just about any time now.
Really, the biggest accomplishment for the quarter was a 30% decline in the share price, to multi-year lows. And even then, the legwork on that was accomplished the quarter before (in the form of the issuing of the shares for the aforementioned fundraising).
Move along, there's nothing to see here.
Monday, August 01, 2005
The Jamco Email
I have to hand it to the REFR promoters; they never stop trying. Last week one of them produced evidence which they say proves that JAMCO cannot possibly be behind the windows of the Boeing 787 Dreamliner.
The evidence comes in the form of an email exchange which went as follows:
But then, what does this mean for REFR? Good question. To answer that, you have to go back to the chain of reasoning the promoters are using.
To listen to the promoters' own arguments, the case that SPD is the technology of choice is not based on any positive evidence directly implicating REFR or, their (only?) licensee in the aeronautical industry, Inspectech, but rather the lack of evidence implicating anything else. No, seriously. The primary argument leading to the conclusion that SPD is Boeing's technology of choice begins with the question, "what other commercially available technology could it possibly be?" This is followed by a flat dismissal of the numerous answers to that question, and eventually winds up with a conclusion that SPD is Boeing's choice by default.
In effect, because it cannot at this time be proven that the Boeing 787 windows are something else, REFR longs are supposed to assume that they will be SPD.
One might think that another multi-year low this morning might jolt a few of them out of the complacency of that line of "reasoning". One would be wrong.
The evidence comes in the form of an email exchange which went as follows:
Dear Sir or Madam:Now, this email may or may not be valid, but then again, that sort of uncertainty can be laid upon nearly anything posted to the message boards. So for now, we'll give the poster the benefit of the doubt.
The specifications for the new Boeing 787 call for the passengers and crew to
adjust the transparency of the windows electronically.
Does Jamco manufacture a variable tinting window product for aircraft
that Boeing could use?
Thank you for your attention.
XXXXXX XXXXXXXXXX
------------------------------------------
Dear Sir,
First of all, we are sorry for late response.
In regards to the your inquiry, JAMCO does not have such product, which can be used
on window, in our current product.
With best regards,
Tsutomu Tadokoro
Manager, Marketing & Sales
JAMCO Corporation, Aircraft Interiors Company
But then, what does this mean for REFR? Good question. To answer that, you have to go back to the chain of reasoning the promoters are using.
To listen to the promoters' own arguments, the case that SPD is the technology of choice is not based on any positive evidence directly implicating REFR or, their (only?) licensee in the aeronautical industry, Inspectech, but rather the lack of evidence implicating anything else. No, seriously. The primary argument leading to the conclusion that SPD is Boeing's technology of choice begins with the question, "what other commercially available technology could it possibly be?" This is followed by a flat dismissal of the numerous answers to that question, and eventually winds up with a conclusion that SPD is Boeing's choice by default.
In effect, because it cannot at this time be proven that the Boeing 787 windows are something else, REFR longs are supposed to assume that they will be SPD.
One might think that another multi-year low this morning might jolt a few of them out of the complacency of that line of "reasoning". One would be wrong.
Friday, July 22, 2005
Time's up
Just felt like making a couple notes. Today is the 10th day before the August 4th deadline for REFR to avoid removal from the NASDAQ-NM to the NASDAQ-SC, so if REFR does not close at $3.62 or higher today, the delisting will go forward. Unless of course they'd like to waste time and effort (whose, exactly, is not clear) appealing the matter.
In other news, let's review the announcement scorecard. Well, at least it's low-maintenance.
Over on the message boards, scandal is hot and heavy as the promoters are demanding to know what the critics theorized about Lang and Inspectech and when they theorized it. The point being, I guess, is if they can catech them wrong enough times about details regarding Inspectech, that will suddenly transform Inspectech into an entity worthy of doing business with Boeing. Or something.
Hey, cut them some slack, it's not easy making a bullish case for this company anymore. Just think if they didn't have the Internet as a buffer and had to vocalize these opinions, and keep a straight face in the process!
In other news, let's review the announcement scorecard. Well, at least it's low-maintenance.
Over on the message boards, scandal is hot and heavy as the promoters are demanding to know what the critics theorized about Lang and Inspectech and when they theorized it. The point being, I guess, is if they can catech them wrong enough times about details regarding Inspectech, that will suddenly transform Inspectech into an entity worthy of doing business with Boeing. Or something.
Hey, cut them some slack, it's not easy making a bullish case for this company anymore. Just think if they didn't have the Internet as a buffer and had to vocalize these opinions, and keep a straight face in the process!
Monday, July 18, 2005
Getting testy
Even as REFR dips again towards $3.00 this morning, many longs remain confident. You might ask why, though if you're a regular reader of this blog you probably have a pretty good idea already.
Nevertheless, it's always "something", and in this case it's the "fact" that all they have to do get is through product testing, and then the licensees will announce film availability, and then products will become available, and then look out world. Or something like that.
Reports on the state of testing are secondhand at best, but the consensus is that while each of the production licensees is working on some sort of problem, no two licensees are experiencing the same problems.
The question is, is that a good thing for REFR, or a bad thing?
It's easy to think it could be good. After all, if no two licensees are having the same problems, then every problem is solved at every licensee but one. So, all that has to happen is to have the licensees get together and they'll easily have the solutions to all the problems between them.
But is it really that simple?
Talk to anyone who's ever worked in quality control, or anyone who's managed to stay awake through one of those training films on the topic of quality, and they'll emphatically answer that question "no".
To cover one obvious possibility, a fix for one problem has this tendency to cause other problems. If one licensee were to apply another licensee's "fix" for their problem, there's every reason to think that "fix" would cause the problems the other licensee was having.
But beyond that lies another annoying question. Why is it that no two licensees can replicate the same results? Are they not following the same process for producing film? Is there a fixed process for producing film? If not, why not? And furthermore, if not, how exactly are the licensees ever supposed to get on the "same page", when they're reading from different scripts, so to speak?
REFR likens its business model to that of Qualcomm, the company that owns the CDMA standard for cell phones. But Qualcomm got where they are today by actually spelling out that standard very specifically, and making sure anyone who licensed the technology followed the standard to the letter. There is no indication REFR is making any effort to do that at all, which, given their minimalist approach to the licensing model, should come as no surprise.
This is a recipe for chaos. Film that Hitachi produces may be entirely different from film that produced by Air Products, or DuPont, or Dainippon. And in the event any one of them hits upon a winning formula, are they going to be eager to share it with their competitors? Doubtful!
One promoter on the message boards is trying to get over the catchphrase, "I would not bet against Hitachi". (At least it's a step up from "Bang! Bang!" -- was this supposed to be investing or wrestling?) But by betting on Hitachi, are you also betting on Air Products, DuPont and Dainippon... or against them?
Besides which, I'll bet against anyone I damn well please, if I don't think they care about "winning".
Nevertheless, it's always "something", and in this case it's the "fact" that all they have to do get is through product testing, and then the licensees will announce film availability, and then products will become available, and then look out world. Or something like that.
Reports on the state of testing are secondhand at best, but the consensus is that while each of the production licensees is working on some sort of problem, no two licensees are experiencing the same problems.
The question is, is that a good thing for REFR, or a bad thing?
It's easy to think it could be good. After all, if no two licensees are having the same problems, then every problem is solved at every licensee but one. So, all that has to happen is to have the licensees get together and they'll easily have the solutions to all the problems between them.
But is it really that simple?
Talk to anyone who's ever worked in quality control, or anyone who's managed to stay awake through one of those training films on the topic of quality, and they'll emphatically answer that question "no".
To cover one obvious possibility, a fix for one problem has this tendency to cause other problems. If one licensee were to apply another licensee's "fix" for their problem, there's every reason to think that "fix" would cause the problems the other licensee was having.
But beyond that lies another annoying question. Why is it that no two licensees can replicate the same results? Are they not following the same process for producing film? Is there a fixed process for producing film? If not, why not? And furthermore, if not, how exactly are the licensees ever supposed to get on the "same page", when they're reading from different scripts, so to speak?
REFR likens its business model to that of Qualcomm, the company that owns the CDMA standard for cell phones. But Qualcomm got where they are today by actually spelling out that standard very specifically, and making sure anyone who licensed the technology followed the standard to the letter. There is no indication REFR is making any effort to do that at all, which, given their minimalist approach to the licensing model, should come as no surprise.
This is a recipe for chaos. Film that Hitachi produces may be entirely different from film that produced by Air Products, or DuPont, or Dainippon. And in the event any one of them hits upon a winning formula, are they going to be eager to share it with their competitors? Doubtful!
One promoter on the message boards is trying to get over the catchphrase, "I would not bet against Hitachi". (At least it's a step up from "Bang! Bang!" -- was this supposed to be investing or wrestling?) But by betting on Hitachi, are you also betting on Air Products, DuPont and Dainippon... or against them?
Besides which, I'll bet against anyone I damn well please, if I don't think they care about "winning".
Monday, July 11, 2005
A small problem
Short sellers in REFR got to see that magic word many of them have been waiting to see for years.
Yes, REFR has been delisted. Sort of. Technically, what has happened is that REFR has "phased down" from the Nasdaq National Market to the Nasdaq Small Cap Market.
(Editorial note: Actually, the notice of delisting was given today. Research Frontiers can avoid delisting by reaching a market cap in excess of $50 million, roughly $3.62 per share, for 10 consecutive trading days between now and August 4th. This probably explains in part today's uptrend in the stock.)
What does that mean? Well, as with so many other events related to REFR, it actually means very little in a substantive sense. REFR will remain REFR, and most people with positions in the company, long or short, will notice no direct changes in the way REFR trades.
One distinction that used to put some dread in the hearts of naive shareholders was the removal of the "bid test" for short sales. In other words, assuming that borrows were readily available, short sales could go off just as easily as any other sort of sales. Contrary to prevailing "wisdom", however, this omission did not open the floodgates for abusive short selling of small cap stocks.
However, that distinction has been removed with the implementation of Regulation SHO, so in fact there is no practical functional difference between the two markets.
Lack of substance notwithstanding, this event will no doubt be an irritation to fans of the stock. What it signifies is that REFR is roughly among the lowest sixth of market capitalizations among Nasdaq-listed companies. This is not necessarily a mantle of shame for new, small companies still on the ramp-up. For a company with two decades of history of public trading, however, it can be rather humiliating. If nothing else, it will be another negative factor for the inevitable next round of capital raising.
Promoters will doubtless downplay this development, and perhaps in a strict sense be right, but it's at least worth bringing up that REFR seemed to think it meant something when it first joined the National Market in 1997.
Apart from that, just another milestone on the road to blue oblivion.
Yes, REFR has been delisted. Sort of. Technically, what has happened is that REFR has "phased down" from the Nasdaq National Market to the Nasdaq Small Cap Market.
(Editorial note: Actually, the notice of delisting was given today. Research Frontiers can avoid delisting by reaching a market cap in excess of $50 million, roughly $3.62 per share, for 10 consecutive trading days between now and August 4th. This probably explains in part today's uptrend in the stock.)
What does that mean? Well, as with so many other events related to REFR, it actually means very little in a substantive sense. REFR will remain REFR, and most people with positions in the company, long or short, will notice no direct changes in the way REFR trades.
One distinction that used to put some dread in the hearts of naive shareholders was the removal of the "bid test" for short sales. In other words, assuming that borrows were readily available, short sales could go off just as easily as any other sort of sales. Contrary to prevailing "wisdom", however, this omission did not open the floodgates for abusive short selling of small cap stocks.
However, that distinction has been removed with the implementation of Regulation SHO, so in fact there is no practical functional difference between the two markets.
Lack of substance notwithstanding, this event will no doubt be an irritation to fans of the stock. What it signifies is that REFR is roughly among the lowest sixth of market capitalizations among Nasdaq-listed companies. This is not necessarily a mantle of shame for new, small companies still on the ramp-up. For a company with two decades of history of public trading, however, it can be rather humiliating. If nothing else, it will be another negative factor for the inevitable next round of capital raising.
Promoters will doubtless downplay this development, and perhaps in a strict sense be right, but it's at least worth bringing up that REFR seemed to think it meant something when it first joined the National Market in 1997.
Apart from that, just another milestone on the road to blue oblivion.
Friday, July 01, 2005
R-Class dismissed
Another door was quite firmly shut in REFR's face as Mercedes Benz announced the specifications for its new R-Class SUV/sedan hybrid. Originally known as the GST, for Grand Sports Tourer, their mention of a "panorama" roof, invoked memory of a similar term used by Daimler's Setra division, and led many to jump an automatic association of "panorama roof = SPD".
That assumption got it's answer today as Mercedes made its milestone announcement just weeks before production is slated to begin. The "panorama roof" is in, but no mention whatsoever is made of variable tinting. They do mention "privacy glass" on side and rear windows, but if there is one thing SPD is unambiguously not, it is privacy glass.
Of course, you won't find a promoter who will act like this matters one whit. All that matters is Hiatchi is working on production, and when they get there, VOOM!
And yes, I was trying to invoke the John Cleese rejoinder there.
Doubtless, they will come up with other tacks with which to keep flogging this horse, and when they do, I will be here to give them the coverage they richly deserve. However, today marks the end of the daily frequency of posts to this blog. New responsibilities figure to cut into the time I can devote to this journal, and in any event I feel the backstory of this strange, strange company has now been fairly told.
So with that, have a great Independence Day, and I'll be seeing you soon.
That assumption got it's answer today as Mercedes made its milestone announcement just weeks before production is slated to begin. The "panorama roof" is in, but no mention whatsoever is made of variable tinting. They do mention "privacy glass" on side and rear windows, but if there is one thing SPD is unambiguously not, it is privacy glass.
Of course, you won't find a promoter who will act like this matters one whit. All that matters is Hiatchi is working on production, and when they get there, VOOM!
And yes, I was trying to invoke the John Cleese rejoinder there.
Doubtless, they will come up with other tacks with which to keep flogging this horse, and when they do, I will be here to give them the coverage they richly deserve. However, today marks the end of the daily frequency of posts to this blog. New responsibilities figure to cut into the time I can devote to this journal, and in any event I feel the backstory of this strange, strange company has now been fairly told.
So with that, have a great Independence Day, and I'll be seeing you soon.
Thursday, June 30, 2005
Where'd the short interest go?
From mid 2001 through much of 2003, the short interest in REFR was a very large, albeit rather stable, two million shares. (For no apparent reason, promoters at the time chose to make up their own number, insisting that there was an additional half million "invisible" short interest. Today these same people will latch on to any excuse to declare the critics to be liars. Go figure.)
In theory, this represented a potential powderkeg for the shorts. If REFR were to suddenly achieve the success that had eluded them for decades, the wave of resulting buying from the short covering alone would lead to huge run-ups in the stock. But then again, we're talking REFR, so shorts were rightly unworried about that eventuality.
Nevertheless, the promoters were unperturbed that, as delay built upon delay, a golden opportunity to catch the shorts off-guard might be slipping away. Why? Because, they said, the short interest wasn't going anywhere. There was no way for the shorts to cover their positions.
It's unclear how they arrived at that conclusion, given that the claim was more sloganeering than debate. But whatever the thought process was, the shareholders were completely convinced. The shorts can't cover and that was all that needs to be said. If REFR took a month, or a year, or ten years to finally succeed, it wouldn't matter because the short interest would still be stuck where it was, waiting to be squeezed to infinity and beyond.
Today the short interest holds steady, at a bit less than one million shares.
Since we'll never get a mea culpa or other explanation from the promoters regarding how they wound up being so wrong about so many things (they're too busy asserting how they will eventually be proven right -- yeah, I know) it falls to the rest of us to piece together what happened.
Two major events appear to have made the difference. The first and easiest one was REFR's delisting from the Russell index. Index funds dumped over half a million shares, and while this weighed heavily on the stock, the stock never quite "broke". It was by and large an orderly decline, with trading volumes increasing nicely to accomodate the mandatory selling by the funds. Where were all these buyers coming from to cushion the fall? It was the short sellers, of course, capturing very nice profits from shares shorted from anywhere from $12 to more than $30.
But prior to that came a rather mysterious occurrence. During one relatively uneventful month, the short interest dropped by more than half a million shares between two reporting periods. There had been a small rise during the period in question, but one that soon fell back, and in any event there was hardly enough volume for that many shares to have been covered in the open market.
So what happened there? Apparently some entity or other had a very large "boxed" position, one hedged against a long position or something equivalent. In the most common cases, such hedging involves options, or shares of a company the shorted company is acquiring, but neither of those applies to REFR.
We may, in fact, never know exactly what happened, but some have strong suspicions. One involves REFR's financier of the time, Ailouros Ltd. While they were supposedly barred from shorting REFR stock in their agreement, it always felt odd that they seemingly had no problem with REFR continuously selling them shares even as they continued to fall. In a few cases, REFR was rather embarassingly found to have been buying the shares right back from Ailouros, at a loss to REFR. But it never seemed right that Ailouros would continue on as they had without some kind of ace in the hole. Could a short position of over half a million shares have been that ace?
Regardless, the shorts today are manifestly in superlative shape, with a relatively mild million shares to worry about covering, and with the stock hovering around 14-year lows. Those still long remain defiant, insisting that one day the shorts will get theirs.
From here, though, it looks like they already did.
In theory, this represented a potential powderkeg for the shorts. If REFR were to suddenly achieve the success that had eluded them for decades, the wave of resulting buying from the short covering alone would lead to huge run-ups in the stock. But then again, we're talking REFR, so shorts were rightly unworried about that eventuality.
Nevertheless, the promoters were unperturbed that, as delay built upon delay, a golden opportunity to catch the shorts off-guard might be slipping away. Why? Because, they said, the short interest wasn't going anywhere. There was no way for the shorts to cover their positions.
It's unclear how they arrived at that conclusion, given that the claim was more sloganeering than debate. But whatever the thought process was, the shareholders were completely convinced. The shorts can't cover and that was all that needs to be said. If REFR took a month, or a year, or ten years to finally succeed, it wouldn't matter because the short interest would still be stuck where it was, waiting to be squeezed to infinity and beyond.
Today the short interest holds steady, at a bit less than one million shares.
Since we'll never get a mea culpa or other explanation from the promoters regarding how they wound up being so wrong about so many things (they're too busy asserting how they will eventually be proven right -- yeah, I know) it falls to the rest of us to piece together what happened.
Two major events appear to have made the difference. The first and easiest one was REFR's delisting from the Russell index. Index funds dumped over half a million shares, and while this weighed heavily on the stock, the stock never quite "broke". It was by and large an orderly decline, with trading volumes increasing nicely to accomodate the mandatory selling by the funds. Where were all these buyers coming from to cushion the fall? It was the short sellers, of course, capturing very nice profits from shares shorted from anywhere from $12 to more than $30.
But prior to that came a rather mysterious occurrence. During one relatively uneventful month, the short interest dropped by more than half a million shares between two reporting periods. There had been a small rise during the period in question, but one that soon fell back, and in any event there was hardly enough volume for that many shares to have been covered in the open market.
So what happened there? Apparently some entity or other had a very large "boxed" position, one hedged against a long position or something equivalent. In the most common cases, such hedging involves options, or shares of a company the shorted company is acquiring, but neither of those applies to REFR.
We may, in fact, never know exactly what happened, but some have strong suspicions. One involves REFR's financier of the time, Ailouros Ltd. While they were supposedly barred from shorting REFR stock in their agreement, it always felt odd that they seemingly had no problem with REFR continuously selling them shares even as they continued to fall. In a few cases, REFR was rather embarassingly found to have been buying the shares right back from Ailouros, at a loss to REFR. But it never seemed right that Ailouros would continue on as they had without some kind of ace in the hole. Could a short position of over half a million shares have been that ace?
Regardless, the shorts today are manifestly in superlative shape, with a relatively mild million shares to worry about covering, and with the stock hovering around 14-year lows. Those still long remain defiant, insisting that one day the shorts will get theirs.
From here, though, it looks like they already did.
Wednesday, June 29, 2005
So how's that plan coming along?
Going back into the PR archives, I want bring out the REFR's master plan as articulated three years ago, at the 2002 shareholder's meeting.
Step one appears to be "having SPD demonstration products made in large quantities". That much they seem to have successfully accomplished. This was supposed to be a "promotional tool" to "increase awareness of SPD technology". That part doesn't seem to have worked so well. Neither the "100 station" radio show, nor the "14 million viewer" TV segment spurred enough demand to, say, keep SPD Inc. in business.
Skipping a bit ahead to founder Robert Saxe's comment: "InspecTech’s model is spectacularly attractive and should convince aircraft owners to equip their planes with SPD-Smart windows." (But didn't.) "By year-end many of the world’s hundreds of ‘Completion Centers’ in which aircraft are refurbished could have this product to show their customers." (But didn't.) "Completion Centers are already being used by InspecTech to market and install SPD aircraft windows." (Meaning, they outsourced the installation.) "I expect this to be a powerful sales promotion tool for SPD technology." (As with every other expectation Saxe has had, not so much.)
You get the basic idea. All these demonstration products served two purposes: one, to allow management to claim products were being made, and two, to make it appear to the shareholders that they were getting serious about marketing SPD.
It was enough to get the shareholders excited at the time. Three years later... the results speak for themselves.
Step one appears to be "having SPD demonstration products made in large quantities". That much they seem to have successfully accomplished. This was supposed to be a "promotional tool" to "increase awareness of SPD technology". That part doesn't seem to have worked so well. Neither the "100 station" radio show, nor the "14 million viewer" TV segment spurred enough demand to, say, keep SPD Inc. in business.
Skipping a bit ahead to founder Robert Saxe's comment: "InspecTech’s model is spectacularly attractive and should convince aircraft owners to equip their planes with SPD-Smart windows." (But didn't.) "By year-end many of the world’s hundreds of ‘Completion Centers’ in which aircraft are refurbished could have this product to show their customers." (But didn't.) "Completion Centers are already being used by InspecTech to market and install SPD aircraft windows." (Meaning, they outsourced the installation.) "I expect this to be a powerful sales promotion tool for SPD technology." (As with every other expectation Saxe has had, not so much.)
You get the basic idea. All these demonstration products served two purposes: one, to allow management to claim products were being made, and two, to make it appear to the shareholders that they were getting serious about marketing SPD.
It was enough to get the shareholders excited at the time. Three years later... the results speak for themselves.
Tuesday, June 28, 2005
To market, to market, to get a fat nothing
I was going to go back an address an aspect of the R. J. Falkner report on REFR, when I found something peculiar. As of noon Eastern, the website is gone and replaced by a "temporarily out of service" notice.
This may mean a lot of things or perhaps nothing at all, but we'll keep a watch on it.
In the meantime, we'll go out on a limb and trust N. Dixon's recounting of the Falkner report for the subject of the markets SPD is/will/hopes to someday participate in.
Flat Glass: very general and redundant with many of the specific products mentioned afterwards, so we'll set it aside for now.
Automotive rear-view mirrors: This market was captured quite thoroughly in the mid 90's by Gentex. Years later, Harary tried to downplay the defeat by declaring the market too small to be worth pursuing(!) Nevertheless, as with old licensees gone inactive, old market long since lost never get dropped from SPD's "potential".
Electrochromic mirrors: Apparently this is there to suggest that Gentex has only a very small part of the market, and that there's plenty of room for SPD to muscle in. Of course that flies in the face of Harary's "too small" declaration, but since when has consistency mattered here?
Automotive sunvisors: Never mind, apparently, that no government is going to allow material that defaults to dark on the front windshield.
Flat panel displays: This one is a real throwback, to the days when laptops largely had monocolor displays and widespread active-matrix LCD was still a pipe dream. LCD has come a long way since then. And SPD?
Eyewear (Prescription, Non-Prescription, Adjustable): They're still holding on to that one regardless of how thorough a failure the Vision-Ease experiment was.
Aircraft Windows: Covered.
The theory is that REFR only requires a very small amount of headway in any one of the above markets to be an instant success and destroy the shortsellers in its stock.
But if that were so, then what does it say about REFR's inability over the course of four decades to accomplish such a trivial-sounding task?
This may mean a lot of things or perhaps nothing at all, but we'll keep a watch on it.
In the meantime, we'll go out on a limb and trust N. Dixon's recounting of the Falkner report for the subject of the markets SPD is/will/hopes to someday participate in.
Flat Glass: very general and redundant with many of the specific products mentioned afterwards, so we'll set it aside for now.
Automotive rear-view mirrors: This market was captured quite thoroughly in the mid 90's by Gentex. Years later, Harary tried to downplay the defeat by declaring the market too small to be worth pursuing(!) Nevertheless, as with old licensees gone inactive, old market long since lost never get dropped from SPD's "potential".
Electrochromic mirrors: Apparently this is there to suggest that Gentex has only a very small part of the market, and that there's plenty of room for SPD to muscle in. Of course that flies in the face of Harary's "too small" declaration, but since when has consistency mattered here?
Automotive sunvisors: Never mind, apparently, that no government is going to allow material that defaults to dark on the front windshield.
Flat panel displays: This one is a real throwback, to the days when laptops largely had monocolor displays and widespread active-matrix LCD was still a pipe dream. LCD has come a long way since then. And SPD?
Eyewear (Prescription, Non-Prescription, Adjustable): They're still holding on to that one regardless of how thorough a failure the Vision-Ease experiment was.
Aircraft Windows: Covered.
The theory is that REFR only requires a very small amount of headway in any one of the above markets to be an instant success and destroy the shortsellers in its stock.
But if that were so, then what does it say about REFR's inability over the course of four decades to accomplish such a trivial-sounding task?
Monday, June 27, 2005
Lowlights of the summer newsletter
Thanks to N. Dixon for picking these comments out of the Summer Newsletter and making my job a lot easier.
...our licensees have received strong indications that substantial orders for several different markets will be placed ....
Nothing like using a lot of words to say absolutely nothing, eh? If nothing comes of it, it won't be REFR's fault, and it won't be the licensees fault, it'll be the customers' fault for giving false indications as to their interest. Darn them!
Notice, though, how nobody seems to have their orders in now. You'd think that if people really want this stuff there'd be a waiting list or something.
.....prospective customers in the automotive, aircraft and architectural fields for products that will require substantial volumes of SPD film.
That's about as close to mentioning Boeing as the newsletter gets. "Prospective customers", translated, means "people we'll try to sell this stuff to."
.....many successful innovations such as xerography, which is better known as photocopying, have required decades to achieve. These efforts usually require more time, effort and expense to achieve than the entrepreneurs involved originally expected. That has certainly been true in our case as well.
Ah yes, the old chestnut of comparing yourself directly to great success stories of the past. The fact that when you actually examine the details, you don't stack up favorably at all, never matters. Xerography, i.e. the technology behind copying machines of the latter half of the last century, did take a certain amount of time to go from original design to commercialization. However, a cursory look at Xerox's own history page puts paid to the notion that the developments are anything close to similar.
The time from original patent to commercial introduction was seven years, not forty. Furthermore, this was in the 1940's when innovation in general moved a lot slower. And then there was the little matter of World War II going on, which diverted resources away from this kind of development.
Xerox, or Haloid as it was then called, had a very profitable and well-established business in photographic paper going on in tandem with their xerography research. In short, the company was already successful and self-sufficient.
Probably most tellingly, Xerox depending on a single "outside" source, well-funded by Xerox, for development of xerography. Contrast that with REFR, who signs on everyone and anyone it can to be part of the group effort, resulting, at best, in much duplication of effort and competitive distrust. And that's assuming that the licensees are even motivated by the meager incentives REFR can offer to move forward.
The Xerox story is one of several Harary, like Saxe before him, likes to try to draw comparisons with REFR. Others include Microsoft, Edison's light bulb, and Henry Ford's automobile. It's a really sick display, and REFR management ought to be ashamed.
Except, I doubt "shame" is anything they're capable of.
One more:
.....I believe that you have a sound basis on which to be optimistic that a successful commercial introduction of second-generation SPD film will be forthcoming.
And a sound basis on which to dismiss failure as the result of "overoptimism". After all, who can find fault with someone for just being too optimistic?
Besides a realist, I mean.
...our licensees have received strong indications that substantial orders for several different markets will be placed ....
Nothing like using a lot of words to say absolutely nothing, eh? If nothing comes of it, it won't be REFR's fault, and it won't be the licensees fault, it'll be the customers' fault for giving false indications as to their interest. Darn them!
Notice, though, how nobody seems to have their orders in now. You'd think that if people really want this stuff there'd be a waiting list or something.
.....prospective customers in the automotive, aircraft and architectural fields for products that will require substantial volumes of SPD film.
That's about as close to mentioning Boeing as the newsletter gets. "Prospective customers", translated, means "people we'll try to sell this stuff to."
.....many successful innovations such as xerography, which is better known as photocopying, have required decades to achieve. These efforts usually require more time, effort and expense to achieve than the entrepreneurs involved originally expected. That has certainly been true in our case as well.
Ah yes, the old chestnut of comparing yourself directly to great success stories of the past. The fact that when you actually examine the details, you don't stack up favorably at all, never matters. Xerography, i.e. the technology behind copying machines of the latter half of the last century, did take a certain amount of time to go from original design to commercialization. However, a cursory look at Xerox's own history page puts paid to the notion that the developments are anything close to similar.
The time from original patent to commercial introduction was seven years, not forty. Furthermore, this was in the 1940's when innovation in general moved a lot slower. And then there was the little matter of World War II going on, which diverted resources away from this kind of development.
Xerox, or Haloid as it was then called, had a very profitable and well-established business in photographic paper going on in tandem with their xerography research. In short, the company was already successful and self-sufficient.
Probably most tellingly, Xerox depending on a single "outside" source, well-funded by Xerox, for development of xerography. Contrast that with REFR, who signs on everyone and anyone it can to be part of the group effort, resulting, at best, in much duplication of effort and competitive distrust. And that's assuming that the licensees are even motivated by the meager incentives REFR can offer to move forward.
The Xerox story is one of several Harary, like Saxe before him, likes to try to draw comparisons with REFR. Others include Microsoft, Edison's light bulb, and Henry Ford's automobile. It's a really sick display, and REFR management ought to be ashamed.
Except, I doubt "shame" is anything they're capable of.
One more:
.....I believe that you have a sound basis on which to be optimistic that a successful commercial introduction of second-generation SPD film will be forthcoming.
And a sound basis on which to dismiss failure as the result of "overoptimism". After all, who can find fault with someone for just being too optimistic?
Besides a realist, I mean.
Friday, June 24, 2005
It's summertime and excuses are easy
Just in time to catch what is looking like a near-term bottom in the stock, REFR has come out with its summer newsletter.
The bulk of the "newsletter" is a detailed recounting, including full transcripts(!) of the annual shareholder meeting from two weeks ago. A first reading seems to back up early reports, so I won't go into too many details. I will note, that while they mention "representatives from Hitachi Chemical", they mentioned none of them by name. This kind of undercuts the insistence that he was at the meeting and is still fully in charge there, rather than retired as some reports have it. (You'd think this would be an easy point to settle!)
I would like to note the last paragraph of the newsletter. Ever vigilant for the latest up-to-date developments, REFR management decided to throw in a few "reassuring words" about the rather dramatic collapse of the stock over the past couple of weeks. This includes the popular chestnute, "the fundamentals have not changed," and that is certainly most true in REFR's case. One has to have fundamentals in the first place, for them to change.
The bulk of the "newsletter" is a detailed recounting, including full transcripts(!) of the annual shareholder meeting from two weeks ago. A first reading seems to back up early reports, so I won't go into too many details. I will note, that while they mention "representatives from Hitachi Chemical", they mentioned none of them by name. This kind of undercuts the insistence that he was at the meeting and is still fully in charge there, rather than retired as some reports have it. (You'd think this would be an easy point to settle!)
I would like to note the last paragraph of the newsletter. Ever vigilant for the latest up-to-date developments, REFR management decided to throw in a few "reassuring words" about the rather dramatic collapse of the stock over the past couple of weeks. This includes the popular chestnute, "the fundamentals have not changed," and that is certainly most true in REFR's case. One has to have fundamentals in the first place, for them to change.
Thursday, June 23, 2005
Checking the scorecard
Okay, it's been over a month now, so let's check the REFR announcement scorecard and see how it's coming along.
Hmm. Um. Okay, I guess I'm going to have to come up with something else to write about today.
All right, how about this. In the past few minutes (as I am writing this), REFR traded down to $2.90 per share. This takes out the split-adjusted low price of 1992 ($2.933). To find a time when REFR traded lower than today, you have to go back to July 5, 1991, when REFR got down to $5 1/4, or, adjusted for splits, $2.80 per share.
For reference, here is a list of remaining "lows" that REFR has between it and its all-time low, a split-adjusted 80 cents per share:
Hmm. Um. Okay, I guess I'm going to have to come up with something else to write about today.
All right, how about this. In the past few minutes (as I am writing this), REFR traded down to $2.90 per share. This takes out the split-adjusted low price of 1992 ($2.933). To find a time when REFR traded lower than today, you have to go back to July 5, 1991, when REFR got down to $5 1/4, or, adjusted for splits, $2.80 per share.
For reference, here is a list of remaining "lows" that REFR has between it and its all-time low, a split-adjusted 80 cents per share:
low price split-adjusted (15/8 prior to 1994)Of course, having assembled this list, I have no doubt set in motion a wave of claims from the diehards that they in fact bought at the low prices above, but what can you do. Besides nod indulgently and chuckle to yourself, I suppose.
06/23/05 2.90 2.9
07/05/91 5 1/4 2.8
07/03/91 4 1/4 2.2667
07/02/91 3 3/4 2
06/27/91 3 5/8 1.9333
06/12/91 3 1/2 1.8667
06/03/91 3 1/4 1.7333
05/31/91 3 1.6
04/02/91 2 1.0667
02/22/91 1 7/8 1
12/07/90 1 3/4 0.9333
09/27/90 1 1/2 0.8 (all-time low)
Wednesday, June 22, 2005
Throwing money away
Today I thought I'd just perform a little tallying of the kinds of losses insiders have suffered on their various purchases over the past couple of years.
I'll start with founder Bob Saxe, the least prolific of the buyers (which probably tells you something right there):
(Losses are based on a price of REFR of $3.00 per share, today's low as of noon Eastern.)
4/20/05: 500 shares REFR @ $5.15 : loss = $1,075
11/12/03: 200 @ $9.48 : loss = $1,296
11/11/03: 200 @ $9.31 : loss = $1,262
11/10/03: 200 @ $9.81 : loss = $1,362
Total loss for Bob Saxe = $4,995
Now President Joe Harary, who has also been absent from the buy side for a while:
6/3/04: 1,729 @ $8.1875 : loss = $8,969
Total loss for Joe Harary = $8,969
Vice President Michael LaPointe, also nearly a year removed from his last purchase:
6/28/04: 500 @ $7.09 : loss = $2,045
5/20/04: 500 @ $8.798 : loss = $2,899
4/19/04: 500 @ $10.44 : loss = $3,720
1/26/04 175 @ $12.05 : loss = $1,584
1/26/04: 250 @ $11.98 : loss = $2,245
Total loss for Michael LaPointe: $12,493
Now we get to the more prolific buyers. First up, director and former forum stock promoter Al Malvino, with a lesson on how not to dollar-cost average:
6/17/05: 1000 @ $3.62 : loss = $620
3/18/05: 1000 @ $5.86 : loss = $2,860
2/18/05: 500 @ $5.97 : loss = $1,485
1/19/05: 500 @ $5.98 : loss = $1,490
12/29/04: 400 @ $6.00 : loss = $1,200
12/2/04: 600 @ $6.11 : loss = $1,866
11/22/04: 300 @ $6.74 : loss = $1,122
7/27/04: 700 @ $6.70 : loss = $2,590
7/9/04: 300 @ $6.77 : loss = $1,131
6/16/04: 569 @ $7.85 : loss = $2,760
6/4/04: 731 @ $8.674 : loss = $4,147
5/24/04: 1000 @ $8.846: loss = $5,846
5/18/04: 600 @ $9.05: loss = $3,630
5/17/04: 600 @ $9.20: loss = $3,720
5/14/04: 700 @ $9.526: loss = $4,568
5/12/04: 700 @ $9.70: loss = $4,690
5/3/04: 400 @ $9.71: loss = $2,684
2/4/04: 3000 @ $12.125: loss = $27,375
2/3/04: 1000 @ $12.12: loss = $9,120
1/7/04: 1000 @ $8.91: loss = $5,910
12/30/03: 1000 @ $9.12 : loss = $6,120
12/5/03: 300 @ $9.10 : loss = $1,830
11/10/03: 300 @ $9.30 : loss = $1,890
10/21/03: 300 @ $11.65 : loss = $2,595
10/8/03: 305 @ $11.55 : loss= $2,608
9/26/03 300 @ $12.05 : loss = $2,715
9/3/03: 300 @ $12.00 : loss = $2,700
7/30/03: 200 @ $13.35 : loss = $2,070
7/15/03: 800 @ $14.56 : loss = $9,248
7/10/03: 200 @ $15.35 : loss = $2,470
Total loss for Dr. Al Malvino: $123,060
As bad as that is, it's still peanuts next to the prize patsy of the board of directors, Corporate Secretary Victor Keen. His buys may have been fewer in number, but he made them count. Against himself:
5/4/05: 10000 @ $3.84 : loss = $8,400
8/19/04: 16300 @ $5.88 : loss = $46,944
7/19/04: 5500 @ $6.75 : loss = $20,625
6/29/04: 10000 @ $7.21: loss = $42,100
6/14/04: 5000 @ $7.79 : loss = $23,950
11/11/03: 5000 @ $9.36: loss = $31,800
9/30/03: 5000 @ $11.51: loss = $42,550
7/15-16/03: 5000 @ $14.50 : loss = $57,500
7/3/03: 1300 @ $14.96 : loss = $15,548
7/3/03: 5000 @ $15.00 : loss = $60,000
6/25/03: 10000 @ $12.05 : loss = $90,500
Total loss for Victor Keen: $439,917
On aggregate, just from buys made in the last 24 months, insiders have lost a total of $589,434.
The purpose of this observation is not to gloat, mind you. I am quite certain that all of the above insiders, even Mr. Keen, can easily afford to lose everything they have invested in REFR stock.
Rather, I just want to observe that when you ask a shareholder why he continues to have faith in this company, one of the things inevitably highlighted is the company's stellar track record of insider buys versus sales. After all, the insider must know something good is in the offing, or they wouldn't buy, would they?
Well, the above illustrates just what that line of thinking got the average investor in REFR. A huge pile of losses with no apparent way out of them.
That is what comes from letting others do your thinking for you.
I'll start with founder Bob Saxe, the least prolific of the buyers (which probably tells you something right there):
(Losses are based on a price of REFR of $3.00 per share, today's low as of noon Eastern.)
4/20/05: 500 shares REFR @ $5.15 : loss = $1,075
11/12/03: 200 @ $9.48 : loss = $1,296
11/11/03: 200 @ $9.31 : loss = $1,262
11/10/03: 200 @ $9.81 : loss = $1,362
Total loss for Bob Saxe = $4,995
Now President Joe Harary, who has also been absent from the buy side for a while:
6/3/04: 1,729 @ $8.1875 : loss = $8,969
Total loss for Joe Harary = $8,969
Vice President Michael LaPointe, also nearly a year removed from his last purchase:
6/28/04: 500 @ $7.09 : loss = $2,045
5/20/04: 500 @ $8.798 : loss = $2,899
4/19/04: 500 @ $10.44 : loss = $3,720
1/26/04 175 @ $12.05 : loss = $1,584
1/26/04: 250 @ $11.98 : loss = $2,245
Total loss for Michael LaPointe: $12,493
Now we get to the more prolific buyers. First up, director and former forum stock promoter Al Malvino, with a lesson on how not to dollar-cost average:
6/17/05: 1000 @ $3.62 : loss = $620
3/18/05: 1000 @ $5.86 : loss = $2,860
2/18/05: 500 @ $5.97 : loss = $1,485
1/19/05: 500 @ $5.98 : loss = $1,490
12/29/04: 400 @ $6.00 : loss = $1,200
12/2/04: 600 @ $6.11 : loss = $1,866
11/22/04: 300 @ $6.74 : loss = $1,122
7/27/04: 700 @ $6.70 : loss = $2,590
7/9/04: 300 @ $6.77 : loss = $1,131
6/16/04: 569 @ $7.85 : loss = $2,760
6/4/04: 731 @ $8.674 : loss = $4,147
5/24/04: 1000 @ $8.846: loss = $5,846
5/18/04: 600 @ $9.05: loss = $3,630
5/17/04: 600 @ $9.20: loss = $3,720
5/14/04: 700 @ $9.526: loss = $4,568
5/12/04: 700 @ $9.70: loss = $4,690
5/3/04: 400 @ $9.71: loss = $2,684
2/4/04: 3000 @ $12.125: loss = $27,375
2/3/04: 1000 @ $12.12: loss = $9,120
1/7/04: 1000 @ $8.91: loss = $5,910
12/30/03: 1000 @ $9.12 : loss = $6,120
12/5/03: 300 @ $9.10 : loss = $1,830
11/10/03: 300 @ $9.30 : loss = $1,890
10/21/03: 300 @ $11.65 : loss = $2,595
10/8/03: 305 @ $11.55 : loss= $2,608
9/26/03 300 @ $12.05 : loss = $2,715
9/3/03: 300 @ $12.00 : loss = $2,700
7/30/03: 200 @ $13.35 : loss = $2,070
7/15/03: 800 @ $14.56 : loss = $9,248
7/10/03: 200 @ $15.35 : loss = $2,470
Total loss for Dr. Al Malvino: $123,060
As bad as that is, it's still peanuts next to the prize patsy of the board of directors, Corporate Secretary Victor Keen. His buys may have been fewer in number, but he made them count. Against himself:
5/4/05: 10000 @ $3.84 : loss = $8,400
8/19/04: 16300 @ $5.88 : loss = $46,944
7/19/04: 5500 @ $6.75 : loss = $20,625
6/29/04: 10000 @ $7.21: loss = $42,100
6/14/04: 5000 @ $7.79 : loss = $23,950
11/11/03: 5000 @ $9.36: loss = $31,800
9/30/03: 5000 @ $11.51: loss = $42,550
7/15-16/03: 5000 @ $14.50 : loss = $57,500
7/3/03: 1300 @ $14.96 : loss = $15,548
7/3/03: 5000 @ $15.00 : loss = $60,000
6/25/03: 10000 @ $12.05 : loss = $90,500
Total loss for Victor Keen: $439,917
On aggregate, just from buys made in the last 24 months, insiders have lost a total of $589,434.
The purpose of this observation is not to gloat, mind you. I am quite certain that all of the above insiders, even Mr. Keen, can easily afford to lose everything they have invested in REFR stock.
Rather, I just want to observe that when you ask a shareholder why he continues to have faith in this company, one of the things inevitably highlighted is the company's stellar track record of insider buys versus sales. After all, the insider must know something good is in the offing, or they wouldn't buy, would they?
Well, the above illustrates just what that line of thinking got the average investor in REFR. A huge pile of losses with no apparent way out of them.
That is what comes from letting others do your thinking for you.
Tuesday, June 21, 2005
R. J. Falkner's sound and fury, signifying nothing
It is quite an amazing feat that Bob Saxe and company have managed to keep the cycle of recapitalization going for a full forty years without ever having produced anything of value to the marketplace. Certainly that is attributable in part to management's virtuoso playing of the stalling game, stretching things out as long as humanly possible and counting on faded memories and a constant influx of new players unfamiliar with their past to carry them on to the next stage. That they have managed to keep it up for this long without having diluted the stock beyond recognition is most remarkable indeed.
Still, it all would have been a lot harder if Saxe and company didn't have a willing accomplice or two willing to help them out. And one of their primary accomplices, particularly in recent years, has been the "research" firm of R. J. Falkner and Company.
Falkner is one of a thankfully dying breed of research firms who put out reports on companies that pay them to do so. Not surprisingly, the reports are uniformly and usually quite wildly bullish.
Falkner's report on REFR is no exception. Their latest summation, dated November of last year (when REFR's price was roughly $7.50, or more than twice today's levels), predicts "REFR?s long-term prospects for profitability and growth will be supported by accelerating growth in royalty income within the next 6-12 months."
For those uninitiated with how these forecasts work, this means that, a little over six months having passed since the report was issued, a new version, with a renewed 6-12 month time horizon, is almost certainly due out shortly.
Some, however, suspect that Falkner's assistance in the promotion of REFR goes beyond their silly "research reports". On its disclaimer page, where Falkner customarily admits how much they are paid by the company being "researched" ($3,500 a month in REFR's case, or more than 1% of the company's operating budget), they also add that they provide "investor relations services" to REFR.
Now, given that REFR already has a perfectly competent investor relations person on staff, the question asks, what kind of "investor relations" does Falkner do for REFR? A sampling of disclaimers for other companies' reports characterizes the compensation as being "for the periodic publication of research reports". So clearly Falkner is doing something else for REFR. What might that be?
One rather blunt theory is that Falkner is responsible for a great deal of the promotional activity on the message board forums. While it's a little hard to accept that REFR could get all that much "bang" for $42,000 a year, there is some evidence to support the suggestion. Much of Falkner's report gets requoted endlessly on the forums. Some have claimed this even happens before the fact, that issues raised on the forums subsequently find their way into Falkner reports, though this has not really been established. Another thread is the frequently raised notion of "paid bashers". While this is an extremely popular accusation on the forums of stock of all types, despite the fact that the practice has never been proven, what would be more natural than assuming the contra side is being paid for their postings, if you yourself are being paid for yours?
At any rate, that's probably far more than enough theorizing for a topic upon which little proof of anything exists. For a good chuckle, read the whole Falkner REFR report from beginning to end and see for yourself just how horribly wrong it has already proven. Tomorrow, I'll show you where you can read past reports from Falkner, to get a really good perspective on just how horribly wrong they have been.
Still, it all would have been a lot harder if Saxe and company didn't have a willing accomplice or two willing to help them out. And one of their primary accomplices, particularly in recent years, has been the "research" firm of R. J. Falkner and Company.
Falkner is one of a thankfully dying breed of research firms who put out reports on companies that pay them to do so. Not surprisingly, the reports are uniformly and usually quite wildly bullish.
Falkner's report on REFR is no exception. Their latest summation, dated November of last year (when REFR's price was roughly $7.50, or more than twice today's levels), predicts "REFR?s long-term prospects for profitability and growth will be supported by accelerating growth in royalty income within the next 6-12 months."
For those uninitiated with how these forecasts work, this means that, a little over six months having passed since the report was issued, a new version, with a renewed 6-12 month time horizon, is almost certainly due out shortly.
Some, however, suspect that Falkner's assistance in the promotion of REFR goes beyond their silly "research reports". On its disclaimer page, where Falkner customarily admits how much they are paid by the company being "researched" ($3,500 a month in REFR's case, or more than 1% of the company's operating budget), they also add that they provide "investor relations services" to REFR.
Now, given that REFR already has a perfectly competent investor relations person on staff, the question asks, what kind of "investor relations" does Falkner do for REFR? A sampling of disclaimers for other companies' reports characterizes the compensation as being "for the periodic publication of research reports". So clearly Falkner is doing something else for REFR. What might that be?
One rather blunt theory is that Falkner is responsible for a great deal of the promotional activity on the message board forums. While it's a little hard to accept that REFR could get all that much "bang" for $42,000 a year, there is some evidence to support the suggestion. Much of Falkner's report gets requoted endlessly on the forums. Some have claimed this even happens before the fact, that issues raised on the forums subsequently find their way into Falkner reports, though this has not really been established. Another thread is the frequently raised notion of "paid bashers". While this is an extremely popular accusation on the forums of stock of all types, despite the fact that the practice has never been proven, what would be more natural than assuming the contra side is being paid for their postings, if you yourself are being paid for yours?
At any rate, that's probably far more than enough theorizing for a topic upon which little proof of anything exists. For a good chuckle, read the whole Falkner REFR report from beginning to end and see for yourself just how horribly wrong it has already proven. Tomorrow, I'll show you where you can read past reports from Falkner, to get a really good perspective on just how horribly wrong they have been.
Monday, June 20, 2005
Feeling flushed
The forums were abuzz all weekend as promoters tried to rationalize their way out of the seemingly straightforward conclusion from Dreamliner designed Klaus Brauer's comments that Boeing was importing the technology JAMCO puts in its airplane lavatory windows, for use in the main cabin windows.
The biggest objection appears to be that the JAMCO lavatory windows are strictly "on-off", not dimming. Of course, that is premised on the theory that the tech from the lavatory will be transplanted as-is with no refinement whatsoever, which seems a shaky contention at best. And really, the whole line of thinking that liquid crystal light shading is strictly binary is quite thoroughly exploded by the development of modern LCD computer monitors and LCD televisions.
Another is that there is no documentation of JAMCO products appearing in business jets, as mentioned in the Brauer comments. Apparently the expectation is that JAMCO, like REFR, would publicize every single sale they make.
One counter-theory that seems to have been definitively answered even to the promoters' reluctant satisfaction is that liquid crystal windows could only function in temperature-controlled interior environments, and that the windows must therefore be facing the cabin interior, not the outside. Unfortunately for this line of thinking, there are photos showing the window to be behind the toilet, which would place it on the exterior of the aircraft.
One can never really assume that this story is making it outside the somewhat insulated world of the message board forums, but it is notable that the stock is diving to fresh lows even as I write this. One thing seems certain: management is almost certainly glad to have gotten the annual meeting out of the way before this revelation broke.
The biggest objection appears to be that the JAMCO lavatory windows are strictly "on-off", not dimming. Of course, that is premised on the theory that the tech from the lavatory will be transplanted as-is with no refinement whatsoever, which seems a shaky contention at best. And really, the whole line of thinking that liquid crystal light shading is strictly binary is quite thoroughly exploded by the development of modern LCD computer monitors and LCD televisions.
Another is that there is no documentation of JAMCO products appearing in business jets, as mentioned in the Brauer comments. Apparently the expectation is that JAMCO, like REFR, would publicize every single sale they make.
One counter-theory that seems to have been definitively answered even to the promoters' reluctant satisfaction is that liquid crystal windows could only function in temperature-controlled interior environments, and that the windows must therefore be facing the cabin interior, not the outside. Unfortunately for this line of thinking, there are photos showing the window to be behind the toilet, which would place it on the exterior of the aircraft.
One can never really assume that this story is making it outside the somewhat insulated world of the message board forums, but it is notable that the stock is diving to fresh lows even as I write this. One thing seems certain: management is almost certainly glad to have gotten the annual meeting out of the way before this revelation broke.
Friday, June 17, 2005
They're really in a jam(co) now
Some days just show why doing this is all worth it.
For many months, the promotional contention was that Boeing was going to buy SPD windows from Inspectech Aero Servies to fulfill their specification of electronically dimming cabin windows. In response to the reasonable observation that Inspectech is in fact nothing more than a broker for the technology with no manufacturing capabilities of its own, promoters demanded, in effect, "well, if it isn't Inspectech and SPD, then who? Who dammit???"
That came to a crashing end yesterday on the forums. The trigger was a post by our friend Ed Wesnofske. In clarification of the most recent challenge, Ed posted a quote from Klaus Brauer, the head of interior design for the 787 project, wherein he stated that the mystery technology for the cabin windows "is in use on some business jets today and, in fact, in some lavatory windows on commercial airplanes."
While Wesnofske's source on the quote is unclear (it was described only as an "online chat"), this proved to be a vital clue. Forum poster xavierducats seized upon the new information and very quickly researched up what very much appears to be the answer to the long-standing riddle.
Meet the JAMCO luxury lavatory. It's certainly not like anything you'll find on your typical domestic flight, that's for certain. But scroll down to the bottom and -- what's this? -- a liquid crystal window that goes clear and dark at the touch of a button. Just as Brauer said.
And if that weren't enough, xavierducats followed that up by referencing the JAMCO news page, wherein JAMCO reveals a long-standing supplier relationship with Boeing, including a significant upgrade in standing for the 787 project.
So there's hardly any room for doubt at all that this is the technology Brauer had in mind with the lavatory comment. Mind you, a handful will remain in denial, as JAMCO has not yet explicitly stated that they are doing the cabin windows, but for all intents and purposes, this particular storyline is over.
But stay tuned. They'll come up with something else soon. They have to.
For many months, the promotional contention was that Boeing was going to buy SPD windows from Inspectech Aero Servies to fulfill their specification of electronically dimming cabin windows. In response to the reasonable observation that Inspectech is in fact nothing more than a broker for the technology with no manufacturing capabilities of its own, promoters demanded, in effect, "well, if it isn't Inspectech and SPD, then who? Who dammit???"
That came to a crashing end yesterday on the forums. The trigger was a post by our friend Ed Wesnofske. In clarification of the most recent challenge, Ed posted a quote from Klaus Brauer, the head of interior design for the 787 project, wherein he stated that the mystery technology for the cabin windows "is in use on some business jets today and, in fact, in some lavatory windows on commercial airplanes."
While Wesnofske's source on the quote is unclear (it was described only as an "online chat"), this proved to be a vital clue. Forum poster xavierducats seized upon the new information and very quickly researched up what very much appears to be the answer to the long-standing riddle.
Meet the JAMCO luxury lavatory. It's certainly not like anything you'll find on your typical domestic flight, that's for certain. But scroll down to the bottom and -- what's this? -- a liquid crystal window that goes clear and dark at the touch of a button. Just as Brauer said.
And if that weren't enough, xavierducats followed that up by referencing the JAMCO news page, wherein JAMCO reveals a long-standing supplier relationship with Boeing, including a significant upgrade in standing for the 787 project.
So there's hardly any room for doubt at all that this is the technology Brauer had in mind with the lavatory comment. Mind you, a handful will remain in denial, as JAMCO has not yet explicitly stated that they are doing the cabin windows, but for all intents and purposes, this particular storyline is over.
But stay tuned. They'll come up with something else soon. They have to.
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