MSS operator Globalstar has launched a staunch defence of the company’s business plan following a stinging attack from investment manager Kerrisdale Capital, which described the company’s stock as worthless.
In a 67-page report and subsequent…
MSS operator Globalstar has launched a staunch defence of the company’s business plan following a stinging attack from investment manager Kerrisdale Capital, which described the company’s stock as worthless.
In a 67-page report and subsequent three-hour presentation, Sahm Adrangi, founder and chief investment officer of Kerrisdale, claimed that Globalstar 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.”
The activist investor was particularly damning over the company’s Terrestrial Low Power Service (TLPS) plans, referring to the concept as laughable and that Globalstar’s spectrum holdings are unlikely to generate material value in any other use case.
Adrangi claims that Globalstar’s US$4bn enterprise value is due to investors believing the ‘outpouring of misleading and ill-informed hype’ over the company’s ability to exploit its spectrum holdings terrestrially.
He summarised: “In virtually all scenarios, the combined value of the company’s unprofitable core satellite business and the potential terrestrial applications of its spectrum assets falls below its massive debt burden, making the stock a zero.”
Kerrisdale has taken a short position in Globalstar to realise gains from the company’ share price dropping. And since the hedge fund’s plan emerged, the value of Globalstar’s stock has plummeted by almost 40%.
In response, Globalstar stated: “Kerrisdale’s presentation is fundamentally flawed and completely mischaracterises a combination of industry facts and Globalstar’s long-term spectrum and operational prospects.
“Kerrisdale’s false assertions are driven solely to negatively impact Globalstar’s share price for its own benefit, and are contrary not only to Globalstar’s view, but that of both the communications industry and the Federal Communications Commission.”
The MSS operator has also scheduled a conference call on 9 October to address Kerrisdale criticisms.
