Small Company Assessment

So i am close to pulling the trigger on a speculative bet (i’ll post the ticker if i do actually proceed) but there are a few, major, hiccups that worry me. The first is the company has a substantial accum deficit - how does one assess such a feature. The second is the company is in a grace period for potential delisting to a major exchange. The good news to the latter problem is the fact that they have zero debt and under 25% ownership from insitutitons (therefore no debt will be called nor will the surge of a sell off continue due to many institutional investors having to sell stake). Let me know your thoughts,

What’s accum deficit?

What are the insiders doing? Small companies usually have executives eating their own cooking.

What’s the catalyst for this company? What is their competative advantage? What’s the barrier to entry for competitors?

^C, you didnt help me at all. I have all this information already covered, i just need help with these two points. Help a brotha out!

Ok. I don’t know how to assess accum deficit, not sure what it is to be honest.

Delisting, I don’t know if that is good or bad.

Sounds like a zombie stock. What is the valuation? if it is above 3x sales, please post so I can short this.

Think about it like this dude: There are more than 8,000 stocks in the US market alone. Is your best play really a money losing company on the verge of getting delisted? (only serious answers, please).

Maybe I am reading your comment as delisted when you meant uplisted?

If you don’t want to post the ticker you can PM me and I will give you an honest 5 minute view, which is usually about all it takes to determine if something is total crap or not. I have hundreds of good short candidates, so potentially one more is not really moving the needle for me, I’m just offering to do it as a favor.

Accumulated deficit is just a negative balance in reatined earnings as far as I remember.

acc deficit means tax lost, which can be a good takeout target for companies who wants to save some taxes; it does not tell you anything more than that…

It means net lost, not tax lost but it does imply the company will likely have NOLs. It basically means the company has been unprofitable by X over its lifespan. You have to be careful with the number because sometimes it can be carried forward via reverse merger and not a true representation of the current business depending on the nature of the business.

What a lot of people don’t realize is that there are a large number of money losing public companies that never go anywhere. It is a big red flag. For every money losing startup software company that has a chance to be great, there are dozens of companies that have no prospects and just burn cash.

Accumulated deficit (i.e. series of net losses) + no debt load (i.e. no large interest payments that caused the net loss) means that these fools have been running a negative EBIT for a while. They are not inadequately capitalized, they just struggle operationally. That’s harder to fix.

Large NOLs are worthless unless the company is ready for a major turnaround and will become immediately profitable. Cannot be realized via takeover.

Some NOLs can be realized in a takeover, especially if the target has been through several transactions in the past and still has NOLs. I assume you’re just being conservative, though.