Thursday, October 8, 2009

New Short Position: KITD


In a post last year, I recommended a documentary from 2001 that was airing on Showtime again, Startup.com, which profiled the rise and fall of a dot-com called govWorks.com. A post on Fred Wilson's blog yesterday (NYC's BigApps Challenge) reminded me of one of the stars of Startup.com, Kaleil Isaza Tuzman (pictured above), the co-founder of govWorks.com. When I found through a quick Internet search that Tuzman was now the CEO of a public company (KIT digital Inc.; Nasdaq: KITD), I figured it might me a good candidate to sell short, so I ran the Altman Z"-Score on it. Its score was -4.17. Recall that a score below 1.1 indicates a high risk of bankruptcy. On the other hand, the financial data that score is based on doesn't take into account two recent acquisitions made by the company, which the company's management claims will be accretive, so bear that in mind.

I shorted this at $11.55 today.

The photo above of Mr. Tuzman is from KIT digital Inc.'s website.

Update: readers of this post may also be interested in this site, which offers tools and ideas for short sellers and includes an automated calculator and screener based on the Altman models: Shortscreen.com

15 comments:

Mike said...

This blog will not flourish with grim reports like that one. I suggest you cover......and quickly.

There are many candidates for shorting in this market but this is not one.

GL.

DaveinHackensack said...

Thanks for your concern, Mike. Stay safe.

Aaron the accountant said...

KIT digital Inc: Financial Statement

Income Statement - 5 Year Summary
Financial data in U.S. Dollars

Operating Income(in millions):
2008: (-18.71)
2007: (-34.24)
2006: (-14.92)
2005: (-6.86)
2004: (-2.38)


Basic Weighted Average Shares:
2008: 2.51
2007: 1.0
2006: 0.45
2005: 0.18
2004: 0.1

Without constant issuance of new shares this company would have been bankrupt long ago!

ironrailsironweights said...

No doubt the HBD crew would find it amusing that a man named Kaleil Isaza Tuzman has been selected as one of the 100 most influential Hispanics :)

Peter

DaveinHackensack said...

You're probably right. Did you see Startup.com, btw? If not, worth seeing. Also worth checking out the comment thread on the NYC's BigApps Challenge.

JK said...

I was wondering where Mike came from, then I saw you posted on yahoo and got assaulted by a bunch of stock-pumper fanboys. God, what a bunch of idiots, that's why I hate message boards.

DaveinHackensack said...

Speaking of stock pumper idiots, someone mentioned this blog to me. You'll find some familiar names mentioned there.

JK said...

Ha! great blog, whose is it? Someone from IHUB?

A few weeks ago I overheard a couple guys in the office talking about how they were thinking of investing in Spongetech because of its "great story". I felt compelled to inject myself into their conversation and informed them that Spongetech is a scam. They saved themselves a lot of money by taking my advice.

I really feel that the surface has only been scratched on the criminality rampant on IHUB. Rawnoc, for example, posts wayyyyy too much on all kinds of boards for him not to be heavily compensated for his pumping of POS stocks. Soapy Bubbles, that's another one. The German guys like bbb are all naked shorters (its easy to do in Germany). Since naked shorters (more appropriate name would be "stock counterfeiters")don't have to cover, they just pump the stocks, instead of bash them like normal shorts.

DaveinHackensack said...

I don't know whose blog that is, but it was referred to me by one of the legit commenters on I-Hub.

JK said...

OT -

Dave check out BOBS today, the Brazilian fast food company I've mentioned to you. Looks like they are preparing to uplist...and they won't need to RS like most OTCBB companies. Fingers crossed. Not as big of a move as AYSI, but still lines the pockets. Feels good.

DaveinHackensack said...

Not bad. Getting to the $5 pps level, time to graduate.

Check out DSNY and CAST. I'm in CAST at $5 -- sell or hold, what do you think?

JK said...

Nice moves with those two also. I think DSNY will settle down soon enough though.

I'd take your profits in CAST asap. Meaning today.

DaveinHackensack said...

Just took your advice on CAST. Out at $8.05. Thanks.

Re DSNY, I've had an open order in to add at .28 for the last couple of weeks. Don't know if it will settle down that much though.

JK said...

My logic for CAST was: CAST has an almost 40 PE, volume is tapering off, just sharply touched its 5 year high, potentially making the "head" of a head and shoulders top, and is a Chinese RM which automatically makes it scammy. I really think you are selling out at the top here, which is hard to do. It will most likely settle down around 5 in the next few months until the fundamentals catch up. Best case I see is it settling down around 6. It won't hit sub-3 bucks again unless it is exposed for some financial shennanigans. China RM stocks are prone to these and I'd never pay for growth-stock valuations on one. There are much better China companies out there: If the overall market dips and GSH falls to 15 or 16 again I am swinging for the fences like I did with RDY. Same with NPD below 5. And both of those stocks pay a dividend, unlike CAST. Patience, patience....

If I were putting in a new order for DSNY, I'd put it in at .28 also. DSNY is very erratic so the crystal ball is cloudy. Who knows what will happen to it. This last rally has low volume so I'm more inclined to think this is a false start.

Anonymous said...

With all respect for your thoughts on mr Tuzman, it is important to make the correct assumptions of Kitd before jumping on the short button:


- up to dec 2007, kitd was named roo. a crappy story with terrible results

- in january 2008, tuzman aquired roo for almost nothing in order to clean up, and to make it into the most successful consolidation vehicle in the new video space

- since then, funding, consolidation and results have proven more than successful. company is cash flow positive and is the only company in its space that is listed so you can control all these numbers for your self

-of course KITD will be issuing new shares, he IS consolidating the market, and he is SUPPOSED to do that. That is what all investors are backing, including those who put in 27 MUS at current share value in august, and the feedroom backers, who put in 4 musd at 11 usd valuation just 2 weeks ago.

in my past business life i have had to do with tuzman plenty of times and he can be very annoying, but regarding kit, i cant say other than that he have succeeded this far with all plans concerning KITD

so: do whatever you want, but for your own sake, dont look at numbers before january 2008, they are not relevant to the case