|Shares Out. (in M):||5||P/E||0.0x||0.0x|
|Market Cap (in $M):||126||P/FCF||0.0x||0.0x|
|Net Debt (in $M):||-55||EBIT||0||0|
Thesis: Short BVSN 1.20.2012
Investment: Social Network For Businesses and a China Connection With Long Legs!!!!!!!!!
Just kidding. BVSN is a classic low-float low-volume pump and dump that is underpinned by what could be a quasi-sexy story, which has been bolstered by the rising market and 'recent business wins.' The stock is being promoted by serial pump and dumpers, whose track records are long and nefarious.
I’m going to make this pretty short and sweet, mostly by showing you some interesting links:
Ok. Now we have some idea who’s promoting on the long side. Let’s look at their backgrounds:
Read the comments in that last one. A good newsletter for researching shorts! Ha.
For posterities sake, even Michael Lewis noted this guy Jonathan Lebed. See below:
Guess who’s behind the National Inflation Association? I really encourage you to listen to the whole Schiff interview.
Amazing. Really Boiler Room type stuff. There's plenty more detail out there on the NIA, Lebed, and their promotional activity. I figure this is probably enough to convince you the recent rally isn't based on reality. We can go into more detail in the comment section if anyone pleases.
On to BVSN fundamentally. Currently, BVSN is losing money and revenues are declining. It’s a dot-com bust that used to trade below net-net. But now its worth 3x revenue! The major growth project is Clearvale, a ‘social network for businesses.’ How’s that working out for them? Meh. Certainly it’s not visible in the financial metrics, and Alexa ranks it a cool #385222 in global popularity. I’ll admit popularity is significantly over a 3 month time frame, but I’d wager most of that is due to the stock promotional activity.
For the record, the Digital London 'win' doesn't really mean anything. In fact, it was annouced 10.27.11 really. The stock went down that day. Also, allegedly the NIA isn't selling their shares until 2.12.2012. But I'd doubt they still own anything at this point.
The stock is up 3x since the beginning of the year on no news whatsoever. Could it go up more? Sure. We're not claiming to catch the top here and there is a material risk of the sham continuing for at least another week, but my guess is that regular (poor) earnings on 1.26.2012 will act as a strong catalyst for selling. It's also possible that the CEO commentary will be bullish (as always) which could drive sentiment, even though the numbers will likely suck. The important point is that, in 1 year, this thing will likely be worth cash or less.
We or funds we own may take a position in this security. Do your own diligence, people!
|Entry||01/20/2012 03:04 PM|
Nice idea...I looked at it as a long at $10 below net net, and decided it was a better short at that price. only issues is it seems to be impossible to get any borrow - where have you been able to borrow as I can't get anything?
|Subject||RE: This is a big one|
|Entry||01/26/2012 03:02 PM|
Thanks for pointing this out.
I shorted some at $39 and a bunch at $23, I think when they report unremarkable, bad earnings tomorrow the promote breaks again, and this could end up lower than where it started, sub $7.
Hopefully you were able to get some borrow when it got near $40.
|Subject||RE: RE: RE: This is a big one|
|Entry||01/26/2012 03:57 PM|
Well worth it, I think. I'd be surprised if this is over $15 in a week and that may be generous.
|Subject||RE: RE: RE: RE: This is a big one|
|Entry||01/26/2012 04:37 PM|
In addition, the Company noted that, during the past few weeks, there has been an unusually large amount of trading activity and price movement in its stock. The Company is not aware of any corporate developments that it believes would explain this unusual activity.
Amazing. Here's the recent press release. Also included are numbers that show the company continues to lose money and burn through cash. http://finance.yahoo.com/news/BroadVision-Announces-Fourth-pz-99005026.html?x=0
Again, thanks for the idea. Should have gotten higher than a 4 in my opinion.
|Entry||01/26/2012 04:45 PM|
As expected, it's a dud. In fact, the release states:
"the Company noted that, during the past few weeks, there has been an unusually large amount of trading activity and price movement in its stock. The company is not aware of any corporate developments that it believes would explain this unusual activity."
Case closed. Now for reality to set in to the stock price...
Sugar, I'm glad to see you got involved. The crappy rating made us think it went unapprecaited! FYI we did get filled in some size at 40, which has more than made up for being early! It's been a hell of a ride though, that's fore sure.
Actually I'm wondering if this trades down below, say 5, is it worth getting long? That'd be a pretty nice discount to cash. But since you can't really have activist involvement in this one, I'm not sure what kind of discount is appropriate given the burn and the reluctance of management to return it.
|Subject||RE: RE: Earnings!|
|Entry||01/26/2012 04:58 PM|
Down another 14% in after hours.
I think if you'd made your write up a little more thorough it might have helped. Personally, I already knew about the company (I'd owned a little a few years ago) so just knowing it was being pumped and dumped, plus knowing who was pumping it, was at the very least worth a high performance rating.
I think this likely slowly goes into bankruptcy. There's been almost no increased use in their products and at the current rate they bleed out over a few years. And management certainly is not value creating, there is a risk they'd take their remaining capital and destroy it in some new/other way. I'm not sure there's a price I'd own it at now.
|Subject||RE: RE: Ow|
|Entry||03/02/2012 04:19 PM|
ClearVale is not a legitimate competitor in Enterprise Social Media and has virtually no traction. You can't even make the eyeball argument- there is nothing there.
|Subject||Lebed tips his hand|
|Entry||03/05/2012 10:23 AM|
The Friday (3.2.12) e-mail sent out at about 3:30 by Jon Lebed tips the pumper's hand (emphasis mine):
"Do you remember when on January 24th I said, "Mark my words... $44.75 won't be BVSN's high for 2012, not even close!" I continued to say on many occasions that I was 100% sure $44.75 wouldn't be BVSN's high for 2012. Well, today BVSN reached a new 52-week high of $46.46 per share... but I am not even going to brag about this.
The main thing I want you to pay attention to from when I said "mark my words" is the last three words of that sentence, "not even close". You see, $46.46 per share is a new 52-week high, but it is still close to $44.75. When I said "not even close" I meant what I said!
If you doubted me about BVSN reaching a new 52-week high, you better stop doubting me now when I tell you that the mother of all short squeezes is about to occur in BVSN. Bloomberg just reported that BVSN's short position grew by 56% over the past two weeks to 436,520 shares, which is 17% of BVSN's 2.54 million share float. These shorts are currently facing very large losses and are being forced to put up more capital in order to meet margin calls.
With BVSN reaching a new 52-week high today and currently rated a 100% perfect technical buy, many new investors will begin researching the company this weekend and I expect BVSN to have an absolutely HUGE day on Monday! I predict right now that by Tuesday, the shorts will be forced to throw in the towel and cover! Even if they don't want to... their brokers will probably force them to because it is unlikely they have an unlimited supply of money to continue meeting margin maintenance requirements forever.
Someone who was dumb enough to short BVSN doesn't belong shorting any stocks to begin with because out of every single stock in the world to short, I will tell you right now that BVSN should be dead last unless you are trying to go broke!
Are you aware of a single industry in the world that is projected to grow 61% annually for the next 5 years? There is only one... enterprise social networking and BVSN is one of only two publicly traded enterprise social networking companies! The other one JIVE also reached a new 52-week high today of $24.54 for a market cap of $1.5 billion. BVSN is a steal compared to JIVE!"
Sounds to me like the latest long thesis is "technicals! short squeeze!" and even with a date "by tuesday." Let's see where this thing trades on Wednesday. We may even get some Greece at our backs to help the slide...
|Subject||Association of International Deflation Society|
|Entry||03/06/2012 01:41 PM|
This made my day! See the site for charts, etc: http://www.aid-society.org/Top-Deflationary-Stock-Pick.html
Introducing Broadvision (BVSN)
An Example of a Deflationary Stock Investment
Among the entire investing universe, Broadvision best illustrates the principle of deflation as is an investment that must be avoided at all cost, or investors risk losing all of their wealth at its currently hyper-inflated stock price.
Broadvision can best be described as a company adept at destroying wealth. This is clearly illustrated by its history of $1.2 BILLION of accumulated losses since its inception in 1993. This is a direct result of the company never having found a sustainable business model, and to this day does not have a clear direction or path to stemming sales and profit decline. The company generates revenue from licenses of BroadVision e-business solutions, including process, commerce, portal and content management and related products and services. According to the company's own words in their Annual Report, they expect that these products, and future upgraded versions, will continue to account for a large portion of their revenue in the foreseeable future. In other words, the company has yet to figure out a way to combat its rampant deflation. How do we know the company has a deflationary issue? Quite simply, its sales have been in constant decline for an entire decade at an average annual rate of almost 20%!
? Broadvision's Deflationary Sales Spiral
Does BVSN Have Any Hope Left?
Our answer: No! The company's only shred of hope for survival is its Clearvale Enterprise Social Network Solution. Introduced in 2009, the solution allows users to access enterprise software solution in a Software-as-as-Service (SAAS) model. After three years already, BVSN has invested heavily in this business, and by its own admission still has not figured out a revenue or profit model. The company warns that it does not have significant prior experience in operating SAAS hosting, does not understand the costs involved, and that its basic product model is given away for FREE. You read that correctly in case you did a double-take...it is FREE. BVSN hopes that potential customers will convert to a paying service, but AIDS is so confident that no customers are converting to paying subscribers that we will paste it in black and white here for you. The company's last annual report says the following: "Clearvale did not generate material revenue in 2010. It will take time for revenue from sales of Clearvale to grow."
Source, Annual Report: http://www.sec.gov/Archives/edgar/data/920448/000092044811000006/form10-k.htm
Competitors are Eating BVSN's Lunch in the Supposedly "High Growth" Enterprise Market
Enterprise software and social networking is an intensely competitive business, and BVSN has to compete with numerous industry heavyweights, and better funded start-ups. A casual 10 minute internet search returned a dizzying array of competitors, some with billions of dollars to spend to establish and defend market share in this industry. IBM, Microsoft, Salesforce.com, EMC, Hewlett Packard, Cisco all are entrenched in the enterprise software market and have released enterprise social software solutions.
It's no surprise we are skeptical BVSN will ever have a chance of differentiating intself in this crowded market. Even new entrants such as Yammer, Jive, and Lithium are raising substantially more money than Broadvision currently has to take market share. If BVSN's Clearvale had any traction whatsoever, why would financiers bypass it in favor of supporting other companies as their preferred vehicle of growth in the industry? The answer is so strikingly clear to us that it took all of 2 minutes to figure out. Clearvale has no obvious competitive advantage and no traction with customers in the marketplace. How did we figure this out you might ask? We took two minutes to see who is following Clearvale on popular social media sites like Facebook, LinkedIn and Twitter....the results shocked us:
Facebook: 63 "likes" (https://www.facebook.com/pages/Broadvision/103986719638267?ref=ts)
LinkedIn: 2 followers (http://www.linkedin.com/company/broadvision/clearvale-79700/product)
Twitter: 457 followers (http://twitter.com/#!/clearvale)
That's right: after 3 years on the market, the company has a little more than 500 people following it on the 3 most popular social media sites in the world, and even much fewer customers! There are more people following our neighborhood's corner deli than there are following BVSN's Clearvale product in the entire world! ?
Does BVSN's Have Any Roadmap For Clearvale's Future?
We can't find any indication that BVSN is building a fast or clear bridge to sales or profitability for Clearvale. Management couldn't have made it any clearer to its investors than in their last earnings report, which still showed declining sales and profitability. The management commented as follows:
"In addition, the Company noted that, during the past few weeks, there has been an unusually large amount of trading activity and price movement in its stock. The Company is not aware of any corporate developments that it believes would explain this unusual activity."
Source, Latest Earnings Report: http://www.sec.gov/Archives/edgar/data/920448/000092044812000005/exhibit99-1.htm
?Yes, you again read correctly. Management told the public in plain English they don't know why anyone has an interest in owning their stock as there are no new corporate developments. If you think management is not being truthful, all you need to do is visit the job opening section of their website. It's here you will see evidence that the company is not growing its employee workforce in any rapid fashion whatsoever to meet "ramping" demand. Only 8 jobs are being offered which would amount to a mere 5% increase in their workforce. Moreover, it does not appear that any of these jobs are listed as international, which suggests there is no demand for their products or services beyond the U.S. We don't know what to make of BVSN's decision to spend money to sponsor the Digital Conference London conference in March, but it does not seem prudent since they've not even scratched the market domestically. It appears to be more wasteful spending to support a product already proven to have limited traction.
Furthermore, when asked on their last conference call if they could provide any insight into customer conversions from their free product offering, to their paid offering, the management could not provide any clear guidance. We could never own a stock in a non-transparent company such as this.
?Investor Irrational Exuberance Will Deflate BVSN's Stock Price
?To say that BVSN's investors are irrationally exuberant at the current time is an understatement. Not since the great technology bubble, have investors ascribed such a wild valuation to BVSN. Of course, with history as our guide, we know what happens when irrational expectations are met with cold hard economic reality.
First, there is no guarantee that enterprise social networks will ever succeed as a business model. A recent study in February 2012 indicates that they are failing to meet expectations because companies have not figured out how to implement and manage them properly.
Does this come as much of a surprise to anyone? After all, the workplace is not meant to be a social enterprise by its nature; a company's main purpose is to drive revenue and profits, not facilitate social interaction among employees. The report indicates "a sharp drop in interest and usage after initial enthusiasm; strong adoption in only one department; confusion about proper use of the software, due in part to a lack of executive involvement; and lack of clarity and maturity of the organization's social business strategy and goals."
?Secondly, as we gone to great lengths to illustrate, BVSN's Clearvale product is up against increasing competition from numerous well-funded competitors, which leaves diminishing hope that after 3 years on the market, they will get any new traction from potential customers.
At its current stock price over $50 per share, BVSN is trading at breath-taking 13.5x price to sales ratio; and that's on declining sales with no end in sight! To put this in perspective, Facebook will come public this year at an approximately $80 billion valuation and is projected to produce $5 billion in revenue in 2012. That would represent approximately 35% revenue growth over 2011 and a forward price to sales ratio of about 16x. Facebook is the premier social media company, with enormous profit margins. Compare this with BVSN which has sales that are declining approximately 20% per annum and is losing money. You can immediately see why we would not suggest owning BVSN as it currently stands. In fact, AIDS would argue that a deflationary company with BVSN's issues should be avoided at all cost, and is worth no more than the value of its cash per share, or a mere $12.
Conclusion: BVSN is all Sizzle and No Steak
AIDS' sole objective is to protect investors' wealth by avoiding deflationary scenarios that can cause serious harm to investors. Among all alternatives in the investing universe, we have never seen a company with more deflationary concerns than Broadvision. Its long-term business model is in serious question, which can be seen from its decade long decline in sales and profitability. Any hope that investors have for a change in fundamentals are seriously misplaced since their lone "growth" area is totally unproven, and setting up to disappoint investors. In only 10 minutes, we easily determined that Clearvale has no traction in the market place and lacking any real "buzz" that a fast growing software product would receive in a casual internet search, in tech gossip circles, and technology blogs. BVSN's valuation at 13.5x price to sales is grossly elevated as it relates to even Facebook's valuation at 16x; Facebook is growing fast and wildly profitable while BVSN is shrinking and bleeding cash. AIDS finds no evidence that Clearvale has any traction in the marketplace, while numerous well-funded companies chip away daily at any remaining hope for the product's potential. With history as our guide, we are a confident, and want you to mark our words, that in due course BVSN will be back where it belongs as a single digit stock.
?In due course, Broadvision will be compared more with a $2 stock such as Microvision (Nasdaq: MVIS), than like Jive Software (Nasdaq: JIVE) or any other enterprise software company with a valid business.
AIDS is a not-for-profit and unfunded organization. AIDS is not a registered investment advisor, broker/dealer, or regulated institution and does not make soliciations or recommendations to buy, sell, or hold securities. AIDS objective is to educate the general population about deflation and illustrate its causes and effects on the economy, and to current and prospective investors. You should not make investment decisions based upon AIDS' research, opinions, or conclusions and must do your own due diligence and consult your own advisers before making your own investment decisions. Any information on this site is provided "as is" without any warranty expressed or implied about its accuracy. AIDS is under no obligation to update any information on its site. AIDS has not been compensated by any company, or investors in any company, mentioned on this website. AIDS has not been referred business by anyone connected with anything mentioned on this website. AIDS is run by ethical people making assessments of economic situations based upon public information, circumstances and research AIDS believes to be true. AIDS will not distribute emails about our ideas up to five times a day via emails in what could be considered "Spam," "Pumping" of ideas, or "Promotion." Any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, goals, assumptions or future events or performance are not statements of historical fact and may be "forward looking statements." Forward looking statements are based on expectations, estimates and projections at the time the statements are made that involve a number of risks and uncertainties which could cause actual results or events to differ materially from those presently anticipated. Forward looking statements in this action may be identified through the use of words such as "expects", "will," "anticipates," "estimates," "believes," or statements indicating certain act ions "may," "could," or "might" occur.