Globalstar, Inc. (NYSEMKT:GSAT) shares plunged today after Kerrisdale Capital presented its short thesis on the company earlier this week. Globalstar executives responded swiftly, however, and Odeon analysts like everything they had to say.
Investors clearly remain unconvinced though, as they’re dumping the stock like it’s toxic waste. A tremendous amount of Globalstar shares changed hands today. As of this writing, more than 11.6 million shares had been traded, compared to the average daily volume of about 7.43 million shares.
In a report dated Oct. 10, 2014, Odeon analyst Jason Bernstein reiterated his Buy rating and $5 per share price target on Globalstar, Inc. (NYSEMKT:GSAT) stock. The analyst also has a Buy rating on the company’s 8% convertible notes, which are due in 2028. He pointed to a number of comments in the company’s rebuttal to Kerrisdale’s short thesis and said that management “completely refuted” everything the firm had to say about it.
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One of the things Globalstar CEO James Monroe said was that he would “like nothing more than to buy as much Globalstar as I possibly could at these prices.” The executive noted that their stock hadn’t dipped that low for quite a long time and added that he is “extraordinarily opportunistic” about the investments he has been making in his company.
The timing of Kerrisdale’s Globalstar short
Bernstein said in his report that the timing of Kerrisdale’s report on Oct. 1 and then presentation on Oct. 6 was “unique.” He pointed out that it was the first Monday after the blackout period, which lasts from the end of the quarter on Sept. 30 through the next 10-Q filing. That blackout period is when insiders at companies may not trade any of their shares.
Because of Monroe’s and Thermo’s roughly 70% stake and $600 million support, the analyst suggests that Kerrisdale suspected they would defend Globalstar, Inc. (NYSEMKT:GSAT) and then timed its presentation accordingly. He believes the timing “speaks to the short term nature and ‘bear raid’ tactics Kerrisdale has employed.”
Globalstar is scheduled to release its next earnings report on Nov. 13 and typically files its 10-Q either the same day or the day after. Bernstein notes that this would suggest that the blackout period for Monroe and Thermo will end on Nov. 17.