SPECIAL TRADING ALERT: Closing Out MOMT
Key Point from this Alert:
- We are closing out our MoneyOnMobile (MOMT) position and issuing a sell rating on the shares following management credibility developments that have weighed heavily on the shares yesterday.
We know smaller capitalized stocks can be a wild ride, and that goes even more so for those on the smaller end of the spectrum. That said, we are surprised and even shocked at the developments at MoneyOnMobile (MOMT), which include:
- Terminating its rights offering and returning $7.4 million held in escrow funds to investors.
- Indian shareholders challenging MoneyOnMobile’s control of its subsidiary My Mobile Payments Limited (MMPL) that is preventing the completion of its 10-K filing.
- Management learning of “numerous unauthorized, illegal actions by MMPL’s Board of Directors, which violate various investment and shareholder agreements in place” which has the company taking “extensive legal action.”
After lining up those developments, it’s not surprising to see MOMT shares free-falling. It’s far from a good situation and we much like the stock price are reacting to these unexpected developments. While we applaud MoneyOnMobile for doing the right things, it does raise numerous questions over the company’s due diligence and partner vetting processes, which calls into question management credibility.
With MOMT shares down 80% today and a dark cloud poised to hang over the management team for what will likely be an extended period of time, thereby reducing the prospects of recovering our invested capital, I’m pulling the plug on MOMT shares and removing them from the Select List. As you and I lick our wounds from this trade, which finished down 88% from our blended cost basis, I’ll continue to look for thematically well-positioned businesses that we can look to profit from using options.
- We are closing out our MoneyOnMobile (MOMT) position and issuing a sell rating on the shares following management credibility developments that have weighed heavily on the shares yesterday.
