The Shorting of Frauds, Overhyped and Bankrupt Stocks Journal

i added some unxl avg in at 29.54
lowered stop to 30.6

 

last try in unxl
shorted at 31.63 stop at 32.75

no target

 

http://seekingalpha.com/article/130...tter-technology?source=email_rt_article_title

boom. if you are still short you are going to bank today. This stock is illiquid and this guy moves stocks

 

A stop like this doesn't really make sense if you are trying to bet on a company being a fraud, overhyped, or bankrupt. The trade thesis is that the stock is worth peanuts - if the price rises 4%, that in no way invalidates the thesis. Therefore one should not go from short to flat just because the price blips up a bit.

It is important to match a stop to your trade thesis. If your thesis is that the stock is going to puke in the next few days without any meaningful rally beforehand i.e. it's a purely technical or news-driven trade, then a close stop can make sense. But if your thesis is long-term, which is the main focus of this journal, then a close stop is totally inconsistent with that.

The best way to manage risk on fundamentals-driven shorts is by having a small position size and no stop (or a super-wide one e.g. if the stock goes up 200%), or by using long-dated puts, or some other kind of bearish options spread.

 

Got in short UNXL a bit on pre-market. That article should be good for a 5-10% sell off

 

Covered half, don't like the strength here. Previous articles tanked this stock a lot, its holding up this time

 

Covered rest at 32.55
probably tanks huge now that I'm out
Stock did look like it was going to squeeze after the open. I should have covered and went long. Just too hard to short this one in small time frames, its you against the longs, hfts and the shorts that panic easily

 

UNXL !!!!!!!!!!!

 

back in unxl 25.5

mental stop 28

 

The below write-up was posted on ValueInvestorsClub

One of the core ways we identify compelling shorts is to find companies where the management team repeatedly lies to investors. Among other reasons, that has been a core part of our UNXL short. Just for giggles, we went through two years of conference calls and several additional years of press releases to document what UNXL management has (or more accurately has not) achieved. What we found were 26 instances of failures or lies or both carried out by the UNXL management team. I’m sure we would have found more if we had extended our review of conference calls or press releases back even further. Included among these lies and failures are at least 8 failed products, 10 missed deadlines, and 8 instances of revenue projections that have not materialized. I wish we could say we found something to balance these out, but the truth is that we didn't find a single promise or forecast by UNXL’s management that has come true. And no, we don’t count press releases about partnering with Samsung or Targus or a “mystery OEM” as a promise or forecast coming true – these are the necessary precursors to making a product and generating revenue – they’re not successes in and of themselves (except perhaps to boost the stock so management can sell). While a lot has been debated back and forth on UNXL, this history of failure we document below cannot be refuted. Below is a compare and contrast between the promises spouted by UNXL management and the reality that turned out to be quite different.



LIES AND BROKEN PROMISES ON UNIBOSS AND DIAMOND GUARD

First, we will list the 8 lies that UNXL management has told us about their current products, UniBoss and Diamond Guard. Let’s start with UniBoss, Uni-Pixel’s latest and greatest product. Current UNXL investors believe UniBoss is poised to launch and generate substantial revenues in the very near future. However, we find it extremely curious that UNXL’s management has made the same exact promises in the past and still have nothing to show for it.



1) The UniBoss lies first start in 1Q 2011 soon after UniBoss was introduced. During the 1Q 2011 earnings call, CEO Reed Killion stated “We expect to see more UniBoss revenue via non-recurring engineering charges starting in the third quarter of this year and that could lead to production orders in late fourth quarter and Q1 for UniBoss.”



This is a clear instance of UNXL management promising revenues from UniBoss. It’s important to note that this is NOT the large PC maker that UNXL signed an “agreement” with in December 2012. This is a different customer.



Did these promises come true? We’ll save you the time of looking up the revenues from 4Q 2011 and 1Q 2012. They were $4,940 and $3,564, respectively. That’s four thousand, nine hundred and forty dollars in 4Q and three thousand, five hundred and sixty four dollars in 1Q. We have not changed the units. These are actual figures.



2) In the following 2Q 2011 conference call, CEO Reed Killion no longer keeps to his 4Q 2011 and 1Q 2012 timeline and delays the timing for production revenues for UniBoss. He states during his opening remarks, “Our first projected production revenue should occur in the near future as one of the companies we are working with is targeting Q2 2012 for the product introduction.”



During the Q&A, an analyst, having revenue recognition pushed back by two quarters, presses Reed on the timing of the product launch. Reed answers, "Our customer feels very comfortable of the fact that given the qualification test passed, and they will be in the market by second half of 2012."



The second half of 2012 has come and gone with no product introduction and no revenues. 3Q 2012 revenues were $0 and 4Q 2012 revenues were $2,030. UNXL is now 0 for 2.



3) In his opening remarks in the 3Q 2011 conference call, Reed Killion reiterates that UNXL expects to have a commercial product utilizing UniBoss launched into the market in 2012. Unfortunately, the timeline has again slipped. He states, "We believe our first production shipments for UniBoss will still be in the end of Q2 2012. One of the early companies we sampled and continue to work with is now targeting Q3 2012 for their first production unit. This was moved from the end of Q2 due to the company's internal schedule."



Later, he echoes the timing of the product launch, "We have some feedback from our first customer. It's about a nine-month cycle that we're looking at right now with some of the customers. So the initial samples that we supported out there in August and September are on track for a commercialized product in Q3 of 2012."



It is now well past the third quarter of 2012. We have yet to see a UniBoss product out in the market with this initial customer. In three separate instances UNXL promised production, revenues, and a commercialized product. After a series of delays, this mystery customer never came through.



What happened to this product? Why is no one asking these questions? Unfortunately, these are not the only promises UNXL broken.



4) For the fourth one, we’ll take a detour and go into a lie UNXL told about their technical capabilities. In the same 3Q 2011 earnings call on November 11, 2011, Reed made an important announcement regarding UniBoss’ development. He proudly states, "We are very excited to announce that we have achieved the capacity to consistently print the conductive copper lines on our UniBoss film and with less than 10 micron."



Based on that statement, UNXL has been producing UniBoss film at less than 10 microns for more than a year and a half. This directly contradicts statements made by Uni-Pixel two months ago. In UNXL’s corporate presentation from February 2013, management said they only achieved ~6μm capabilities in 2013, which is why there has been such sudden and deep interest in UniBoss. Before 2013, they were unable to get below 10 microns. This is puzzling. CEO Reed Killion clearly stated that they were able to “consistently print” at “less than 10 micron” back in 2011. Yet, on slide 17 of the presentation, UNXL clearly shows they only had the capability to print ~20μm lines in 2011 and ~12μm in 2012. They were not able to print under 10 microns before 2013:






Why did Reed Killion lie about UNXL’s technical capabilities back in 2011? Which statement is true, or are they all lies?



5) Now we jump ahead to 2Q 2012 where again UNXL makes promises about future product launches. This is a different product from the one promised in 2011. In fact, that product from 2011 is never mentioned again in any conference calls or press releases.



In the earnings press release from 7/30/2012, CEO Reed Killion states, “We’ve received our first reference design for UniBoss as an ‘e-sensor’, which makes possible a revolutionary touchless interface that uses hand gestures, and takes advantage of the latest advances in computer hardware and operating systems. We anticipate the ‘e-senor’ [sic] to be introduced to the notebook market in the second quarter of 2013 or sooner.”



It is now the second quarter of 2013 and there’s been no mention of an e-sensor for UniBoss. The only product they mention now is a notebook product. Where is this e-sensor product and where can we purchase it? Where has this product gone?



6) The most recent lie about UniBoss came less than 6 months ago. It also has to do with a phantom product using UniBoss. During the 3Q 2012 earnings call, CEO Reed Killion states, "We've had multiple design wins. The most prevalent design wins are with an 11.6 inch notebook and the other are three, 10.8 inch tablets that should be rolling out second half of the year."



Wait, what happened to these 3 tablets that were supposed to be introduced in the second half of 2013? How come there’s no mention of the tablets and only mentions of the notebooks? Where did the tablets go? Did they run away with the e-sensor?



We don’t yet know what will happen to more recent promises regarding Uniboss, but our diligence suggests UNXL’s prior failures are likely to be repeated.



Diamond Guard



With Diamond Guard, the lies are just as blatant. We count at least 2 lies and broken promises.



1) In the 1Q 2011 conference call, CEO Reed Killion introduces Diamond Guard and announces that UNXL is in "advanced to late stage discussions with a major national electronics retailer. Initial orders are anticipated in the second quarter 2011, with products on the shelf by third quarter 2011."



This is in reference to Diamond Guard and Uni-Pixel’s finger print resistant film (FPR). We will get into the FPR product later. Let’s focus on Diamond Guard for now.



In anticipation of the commercialization of Diamond Guard, UNXL even announced that they had signed a “letter of intent with Griffin Technologies, a leading global mobile accessory company, for an exclusive retail relationship in North America.” This is exciting news and an analyst asks on the call if UNXL expects “to be shipping rolls at the end of this quarter.” Reed Killion responds, “I certainly do,” and later adds, "I think you'll see a tremendous uptick in this quarter going into the third and fourth quarter with respect to revenues."



3Q and 4Q 2011 revenues were $731 and $4,940, respectively. Again, we did not change the units.



Things were so bad that in the 2Q 2011 earnings call, Reed Killion admits that "sales of our Protective Cover Film products have not met our revenue expectations." As a result, he says, "This will significantly lower the $6 million revenue that has been discussed for fiscal year 2011.”



How much lower? Full year 2011 revenues were $195,237. That’s a far cry and a complete and utter failure relative to that lofty $6 million figure.