Kodak Crashes 85% from Recent Peak


Kodak. We've been all over this for the past two weeks. Right I told you they got a seven hundred and sixty five million dollar loan to get into the drug. Business Kodak the Film Camera Company getting into the drug business. Turns out in their one hundred thirty, one year history they actually were in the drug business for six years from one, thousand, nine, hundred, eighty, nine, hundred, ninety, four, it was a failure they got out and it's notable that they got in one thousand nine, hundred, eighty, two years before the recession set in right typical top of the cycle de Worse vacation kind of acquisition move for for a company is being managed into into the ground so. That's where it to the reason episode again and and we're back in the drug business with this seven, hundred, sixty, five, million dollar loan from the government I thought that was just kind of crazy enough all by itself because sent the stock soaring from to sixty two on a Monday to sixty dollars at the peak on a Wednesday in you know the third trading session of the week that week. Just insane. That was crazy enough right. Then what are we talk about last week? Well, they granted themselves stock options the day before announcement like that's not fishy like. Crony capitalist move, you know to just try to rake some of his money off the top of the management team. Okay. Now. This Week There's well other stuff going on. So so since last we talked the SEC is investigating this thing. And the loan from the. International, the government agencies called the DNC, the Development Finance Corporation the DNC loan is on hold. And the stock as I speak Ios below ten bucks again, and if you look at the stock chart of the last several days, it looks like it was flatlined. You know like somebody whose heart stopped and then wham the hit it with the paddles and now it looks like his heart stopped again it's a ridiculous episode but I feel like I need to clarify something because of at least one feedback email I got in this case. No, it is not okay for these executives to get stock option grants it's not okay and it wasn't okay for them to get them. I don't believe even back in May. Right I put together a time line I wrote a whole piece about this for the stands very digest and I put together a time line and my timeline showed that the order the executive order from President Trump. Was May fourteenth. Two days before that Kodak moves seventy million dollars from a Chinese subsidiary to a US subsidiary quote in anticipation of an intercompany transaction and quote I believe starting up a new pharmaceutical subsidiary constitutes an intercompany transaction, right? So that was actually made twelfth may fourteenth. Trump is used the executive order and invokes the defense production act and says, Hey, you know, let's lend money to companies so that we can produce drugs domestically because too much drug production is overseas in places like China and India by the way if you research that, it's not completely true. We'll talk about that. Maybe another day Kodak made the director option grants the first time on May twentieth today their annual meeting. So, eight days before they're moving money from Chinese from a foreign subsidiary to to a US subsidiary anticipation of a major transaction. Then trump invokes this defense production act, which is just appropriates money for national security right two days later, then six days later, they grant themselves these options at premium prices. Then approximately may eighth according to an interview with the CEO Kodak, and this government agencies start talking about its new drug business. Then on July twenty seven, these idiots grant themselves more options. Then July twenty eighth and it leaks out stock was up twenty, five percent that day the news leaked out. and. Then Twenty John Twenty as the big announcement right? Seven, hundred, sixty, five, million dollar loan to Kodak the shares were up four fold that day July twenty, ninth the stock price hit sixty dollars. And the volume that day is like a hundred and sixty times the previous day and the previous day was twenty, two times the David were that. Next Day July thirtieth a fellow called Mike or non gap thoughts. Which is a a newsletter that he writes on sub stack non gap thoughts. He writes this article citing these suspicious option grant dates when and strike prices next day July thirty fourth. Wall Street? Journal publishes an article citing the potential you know ninety, they said ninety five million dollar windfall for CEO Jim Continente. And there were others on on the Management Team received the options to August. Fourth Wall Street Journal publishes an article citing a new SEC investigation into the disclosure of the loan and the option grants right because it looked like the the loan with the news of the Lomas leaked out on the twenty seventh I think is really what they were concerned about. But the whole thing stinks and let me tell you something what I alluded to earlier when I said I need to make something clear about this. This is not the way capitalism is supposed to work. A corporate management team is supposed to make a lot of money. They're supposed to get ninety five million dollars for creating a business that has performed well for a period of time. That has generated you know for ninety, five, million bucks. You'd better be generating you know at least a billion or more couple of billion hopefully in free cash flow over a period of time consistently, right a real sustainable business for that kind of reward. You don't get paid that kind of money just for getting a loan to be in a business that you were in for six years out of your one, hundred, thirty, one year history and sucked at. Okay that's not the way this is supposed to work. This is the ranking crony capitalism, the EST crony capitalism. And crony capitalism is when you get paid for no in people, right it starts looking suspicious back in May when they're moving seventy million bucks from China to the US, it looks like they already knew they were going to do something and then Oh, two days later trump invokes this this executive order appropriating these loans for this kind of stuff and then up six days. Later, we start granting ourselves options at prices that suggests we know the stock is GonNa take off like a rocket ship. Then we do it again on July twenty seven just to show you how utterly stupid we are. This is not the way it's supposed to work they basically what they did here was. They just took money from well, you know this government money. So you could say they took taxpayer money and they said how can we get way too much of this money in our own pockets? Oh, I know let's grant ourselves a bunch of options. Okay, your stand. Now, I don't have a problem with option grants in general I. Realize people need to be incentivized. It's just the way. Things are nowadays right to to attract good management. You gotta pay them. What looks like way too much money a lot of the time, but this is not that. This is a management team taking money from taxpayers and really taken ultimately from shareholders as well. They're given themselves equity for free that the shareholders have to buy in the market. This isn't the only episode of this. You'RE GONNA see there was a smaller episode that I I kinda filed this way I didn't think I was going to mention it but there was a guy. David? T hines in a story in the Washington. Post. July. Twenty Eighth I mean it's all allegations so I don't know I'll just say this poor fool apparently borrowed four million dollars in this federal PPP paycheck paycheck protection program it was part of the cares act. Right. The cares act was that two trillion dollar corona virus bill that was signed into law in March and included three hundred and forty, nine billion in forgivable loans for small businesses to maintain operating expenses. Mostly payroll, right? That's why it's called. PAYCHECK protection program. So you can just pay your employees even though maybe you're running a restaurant and they have to stay home because of the cove in nineteen, right. So this guy gets four million from this program and then a week later people see him riding around. Miami beach in a Lamborghini. A brand new Lamborghini Lamborghini. Hurricana. Which I guess. That's an electric Lamborghini costs more than three hundred, eighteen, thousand dollars again, how stupid is this guy? That's like granting yourself options the day before the loan announcement. And of course, these things are ripe for. For, this kind of abuse, this is what you get went when the government starts literally like throwing money around all, this is done very very hastily right because we think we have to act we have to act now. and. So this is what you wind up with. You wind up with Kodak and you wind up with this poor sad sack who who thought he wasn't GonNa get caught when he use P P peabody to buy a fricking Lamborghini. It's you know somebody's going to include that in some kind of TV you know some kind of fictional TV show because it's just too priceless. So that's where we are that. That's where we are in. You know the state of of all things financial in August of twenty twenty. Boy Twenty twenty is the weirdest fricken year. I mean things that I won't even get into some of the things that that people I know have been exposed to this year, but it's just. So it's also utterly weird when you shut who who'd a thunk who'd a thunk when you shut down the global economy because you're afraid everybody's going to get the flu or whatever. That all of this stuff would happen that you would get people you know in Lamborghinis with government money and you know Kodak Management taking money out of taxpayers, pockets would have thunk it. Anybody. With a brain is the answer to that one anybody with a brain. And what what you do about what you do about it well. Look we told I told you to avoid Kodak because. People look at that kind of action and the knee jerk. The thing that's built into your brain you know that's that's been kind of evolving for hundreds of thousands of years in complete evolved for hundreds of thousands of years completely different circumstances that have nothing to do with investing. So immediately, as soon as you see that surge Kodak you want hit the buy button but I'm telling you it's deadly and wrong every single time

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