Globalstar’s share price rose by more than 12% in two days after hedge fund Kerrisdale Capital revealed in an SEC filing that its US$7.3m of put options in the company had expired in December.
However, contrary to reports, Kerrisdale said that…
Globalstar’s share price rose by more than 12% in two days after hedge fund Kerrisdale Capital revealed in an SEC filing that its US$7.3m of put options in the company had expired in December.
However, contrary to reports, Kerrisdale said that Globalstar is still its largest short position, with the fund maintaining its view that the stock is essentially worthless.
Speaking to SatelliteFinance, Kerrisdale’s founder and chief investment officer Sahm Adrangi said: “Our put options expired in the money and we exercised them to short the shares. We remain short on the stock and it’s exclusively in the shares, no options.”
Back in October 2014, Adrangi released a 67-page report attacking Globalstar’s business plan and claimed that the company is “not worth US$4bn, or US$3bn, or US$1bn. It is worth nothing, and it takes little more than a rudimentary understanding of wireless communications to realise that.”
Kerrisdale was particularly damning over Globalstar’s Terrestrial Low Power Service (TLPS) plans. The MSS operator hopes to repurpose some of its satellite spectrum in the 2.4GHz band to provide a terrestrial LTE-based service that would increase the available Wi-Fi capacity in the US.
Kerrisdale does not believe that such a service is practical or even necessary and Adrangi argued that Globalstar’s US$4bn enterprise value at the time was due to investors believing the ‘outpouring of misleading and ill-informed hype’ over the company’s ability to exploit its spectrum holdings terrestrially.
In response, Globalstar said that the assertions were false and fundamentally flawed, adding that they were driven solely to negatively impact its share price.
To that end, after Kerrisdale plan emerged the value of Globalstar’s stock plummeted by almost 40%.
Since then the operator’s largest shareholder, Thermo Capital Partners, the private equity firm controlled by Globalstar CEO Jay Monroe, as well as its management have snapped up a large number of the shares to take advantage of the low price.
