“Buyout Imminent” for $3 Tech Stock?

Jason Stutman says "Giant Silicon Valley Corporations Are Looking to Gobble Up This Small $3 Firm"

Newsletter marketers love to be able to tout a buyout and promise a double in the stock they’re recommending — they know it almost can’t help but catch your attention… and heck, if the stock’s small enough they might even be able to cause it to double just by pouring a few hundred enthused new investors into the shares.

So it’s no real surprise that Jason Stutman is pitching his The Cutting Edge newsletter with a big, bold “Buyout Imminent” headline.

Here’s the top of the ad, which sure drew in Gumshoe readers and sent a flurry of questions my way:

“Giant Silicon Valley Corporations Are Looking to Gobble Up This Small $3 Firm:

“Buyout Imminent!

“If This Tiny Stock Doesn’t Deliver 100% Gains or Better…

“I’ll Send You a $1,000 Check!

“You Never Have to Give it Back.

“You Can Spend It However You Please…”

I haven’t heard much about Jason Stutman, and this pricey The Cutting Edge trading service appears to be fairly new as far as I can tell — it looks from the marketing materials like they’re trying to recommend stocks with big future potential, probably mostly in technology, that have been oversold. The only pitch of Stutman’s that I’ve covered recently was when he was teasing Opko Health as the “Doctor on a Chip” stock for a less expensive newsletter at Angel Publishing (we covered that in more detail in this Friday File from last month, which I’ve now opened up to all readers if you’re curious)… so he doesn’t have much of a track record yet when it comes to teasers here in Gumshoedom… but let’s see who he’s teasing now, shall we?

Penny Stock Lands Major Deal With Silicon Valley Titan

“Microsoft must really like what it sees…

“After all, the firm doesn’t sign deals with just any tech company.

“Microsoft has partnered up with this tiny firm for its earth-shattering technology.

“The deal gives this penny stock access to Microsoft’s giant, growing resources. I’ll explain why this is so valuable in just a moment…

“But a deal like this is absolutely huge for this penny stock, which I believe could be worth several billion dollars in as little as a few years from now.

“I think investors who act now could make 100%… and that’s just for starters.

“Beyond that, the gains could be… well, extraordinary.”

What is it that this company does? He says they have an “incredibly disruptive technology” and have “cracked Silicon Valley’s master code” — which basically means that they can help different kinds of computers all run the same software, even if it wasn’t intended for a particular device. Here’s more…

“Employees are now increasingly mobile, traveling and working in offices all over the world.

“On top of that, the employees of a company are not all using the same devices for work.

“The amount of different devices used these days, even in one office, is STAGGERING.

“There are laptops, desktops, smartphones, tablets, Apple TV, and more.

“In short, not everyone is sitting in the same office or using the same devices anymore.

“With employees using different devices and working from many different places, it’s becoming difficult for employees to view and share the same files.

“That’s because not all of the software they’re using is compatible on every device….

“But here’s where our little $3 firm — and its revolutionary technology — comes in…

“Its technology lets employees access and share virtually ANY program — on ANY device — from anywhere in the world.

“In other words, it makes virtually any piece of software compatible on almost ANY modern device.”

And, of course, there’s that “I’ll give you $1,000” promise…

“Silicon Valley has no choice but to embrace this company’s technology.

“Big tech juggernauts like Microsoft and Dell already are.

“Now, the science behind it is super technical. No matter how computer savvy you are, it’d be difficult to understand it.

“But I’m so on board with this technology — and its massive potential — that I GUARANTEE this stock shoots up 100% or gets bought out.

“And if it doesn’t, I’m willing to give you $1,000, which is yours to spend as you like.”

So who is it? Thinkolator sez that we’re being teased about Sphere 3D (ANY), a company that sells cloud storage and virtualization technology.

This is indeed a very small company, and a young one (it went public in 2013, and still has a market cap around $200 million, and most of the revenue-producing parts of the business have been brought in by recent acquisitions), and it has been on a pretty wild ride lately — it’s up quite a bit from the $3 lows of a couple months ago, so it’s more of a $5 stock than a $3 one these days, but it is also well below the $11ish highs it hit almost exactly a year ago. Some of that surge might be coming from Stutman’s ad push in recent days, though it’s a small stock in a hot sector with quite a bit of news flow so it doesn’t take a lot of new attention to make it bouncy.

And the $1,000 offer from Jason Stutman is, of course, just another variation on the “you like it or (part of) your money back” spiel — he’s selling two-year subscriptions for $1,795, and he’ll send back $1,000 of that if you don’t have a chance to double the share price in two years. A lovely sentiment, I suppose, but it’s just a partial refund — not a gift of $1,000. If you sign up for a membership in the Stock Gumshoe Irregulars for $1,049, I’ll send you $1,000 too.

The shares have been volatile enough, and the company is small enough, that it’s certainly conceivable that it will double over the next two years, particularly if you are also willing to see it drop 50% at some point during that time period. Heck, if Stutman really recommended it at $3 a few months ago he’s pretty close to a 100% gain already.

He’s not the only optimist on this one — here’s a recent analyst excerpt from Roth Capital from a couple weeks ago, predicting a bounce of 50% or so…

“Our target price of $8 is based on 10 times target price/earnings multiple on calendar 2020 GAAP EPS estimate of $1.04 (with revenue of $255.5 million and adjusted Ebitda of $72.3 million) discounted back at 10% per year. Our $8 target price is supported by a discounted-cash-flow analysis using a weighted average cost of capital (WACC) of 8%. We caution investors that Sphere 3D has to execute well with its design wins for its Glassware 2.0 and SnapCLOUD storage/data-management technology and also successfully execute on the partnership with Microsoft Azure Cloud services and other key partner programs.”

That’s a strained argument that only a sell-side model-obsessed analyst could love, but it seems to reflect the sentiment pretty well. You can certainly make the argument that you think Sphere 3D’s technology is about to take a big leap and bring in new customers, and that their growth could accelerate… but basing your “target” price on 2020 earnings is, of course, beyond silly.

There’s also some thinly veiled hinting by Stutman that it will be Google who buys out Sphere…

“Google’s top executive for its Education Division, Jason Katcher, has commented about this tiny company on his Twitter account multiple times.

“He’s even hinted at a potential buyout…

‘[This firm] would make for an interesting acquisition,’ says Katcher.

He’s personally accumulating shares of this tiny $3 stock too, which is another reason I think Google could already be negotiating a deal with this company.

‘Buying more. Too much upside,’ Katcher says.

“Talk about a ringing endorsement.

“Of course, he’s not the only one who’s loading up on shares.

“Remember, Wall Street banks have recently increased their positions in this stock by 239% in just three months.

“That’s more than any other small-cap tech company on the market.

“Cyrus Capital has a large stake in this firm with over 5.9 million shares. It is a major investor in Virgin America, the airline founded by billionaire Richard Branson.”

Katcher tweets sometimes about his individual investment ideas and did indeed tweet about $ANY a few times — though the speculation about a takeover called out VMWare (VMW) and Citrix Systems (CTXS) (both virtualization pioneers) as possible acquirers.

Sphere’s technology is not alone in the virtualization space, of course — their Glassware 2.0 technology seems to be a “container” technology that is in some ways similar to Docker, an open source and hotly-discussed container technology standard that’s being commercialized now, and there are lots of startups in the “container” space. There’s a decent explanation of what Docker does here, an explanation from Sphere 3D of its Glassware container product here, and a piece about a dozen other “container” startups here if you’re curious about getting more background.

Sphere 3D has been working closely with Microsoft and its Azure cloud platform, and hosting events at Microsoft tech centers to spread the word — and they did make a deal with Microsoft that lets Sphere bundle Microsoft’s server software with its Glassware virtualization appliance. I don’t know if that’s unique or fantastic, but it’s certainly not bad. They’ve also made some deals in the education space, where virtualization and cross-platform compatibility is a pretty big deal (with schools often using outdated, specialized or inexpensive equipment, like iPads or Google Chromebooks, but having to run specialized educational software designed for different operating systems), but the financial impact has so far been pretty light and it’s still quite early in their rollout — they had essentially no revenue a year ago, and have boosted the top line to about $20 million as of the last quarter thanks largely to a series of acquisitions.

And funds managed by Cyrus Capital do hold a large position in Sphere 3D, though that’s largely because they had a large stake in Overland Storage before they were acquired by Sphere late last year — Cyrus also holds some of Sphere’s convertible debt and warrants, so their position really tallies up to about 22.5% of the company. I haven’t seen any commentary from them about their plans for this holding. Cyrus does indeed also hold a large position in Virgin America, it looks like they held that before the IPO last Fall as well but now do control about 24% of the equity in Virgin America. Doesn’t mean much when it comes to Sphere 3D shares, of course, but I guess the point is that they’re not an inconsequential investor.

Will Sphere 3D get taken over? Are there huge gains in their future?

I have no idea — they were running a bit low on cash recently and did a private placement for about $4 million and also extended some of their credit lines a little bit to add what looks like about $5 million more in borrowing potential, but that’s only a quarter or two of “cash burn” at the current pace so they’re still pretty close to the edge financially. They need more capital if they’re going to continue pushing to roll out their products aggressively and get sales up — that capital will be a lot easier to get now, with a product that seems to be getting some good attention and with real revenues rolling in, but I’d be surprised if they didn’t sell some more stock sometime soon unless revenue starts growing much, much more dramatically.

We have a tendency to think of small young tech companies as being cash-rich, but that’s certainly not the case with Sphere 3D — indeed, one of the only things that makes me specifically nervous about Sphere 3D is that they’re not gushing with cash, there are plenty of pre-revenue companies with cloud products that can seemingly raise $100 million dollars or get billion-dollar valuations without even having to say “please” these days, so why isn’t Sphere “hot” and overfunded? Did they just fall through the cracks because they went public in Canada initially, or because they just remade the company through acquisition recently? I don’t know, but it gives me pause and reason to think more about it before getting excited.

Sound like the kind of speculative little tech company you’d like to own? Let us know what you think with a comment below.


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46 Comments on "“Buyout Imminent” for $3 Tech Stock?"

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modernrock
Irregular
236

Well done.

biotechlong (btl)
Irregular
2793

Travis,
Dr. KSS has shared copious information re $ANY on his recent threads and rendered a positive recent assessment of $ANY as a possible moderate risk, short-term trading opportunity – subject to completion of individual due diligence.
Long $ANY

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Griffin
Member
2870

Travis can’t say the good Dr KSS beat you to it, but wonder where Stutman got his information. 8-]

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Jason Stutman
Guest
0
Stutman here. I will say this is both an accurate and fair write-up. I obviously wish Gumshoe would have put this on the paid, but that’s the way the cookie crumbles I suppose. I’ll point out, though, while I’m here, that simply knowing the ticker symbol isn’t everything. What you’re really paying for with a newsletter subscription is continuous coverage on a stock/situation that catches your interest. I’m not just talking about some basic Internet research, either: I was chatting face to face with $ANY execs just last month at Microsoft’s offices in New York, so believe me when I… Read more »
Jason Stutman
Guest
0

Also loads of respect to GumShoe if that comment makes it through moderation.

enzmeister
Irregular
7

Wow… Street cred for sure with your contribution, and your msg respected.

Come by again!

fairmead15
Member
41

What he doesn’t say is that he guarantees the cheque (OK for you septics the check) will clear if you present it to for payment ! Note the very careful wording of the promise. “I’ll send you a $1,000 cheque. You never have to give it back.You can spend it (the dud cheque) however you please” Bovine excrement comes to mind.

Jason Stutman
Guest
0

Skepticism is warranted with any slideshow-promotion, but the checks (if they go out) will not be duds, Peter. I can promise you that.

midorosan
Member
56

I think Mr. Stutman thought you wrote sceptics, can’t be too many people in this thread know what you mean. Narimeen

briand7035
Member
22

This is really good stuff. Travis doing his thing, Mr. Jason Stutman coming public and explaining his opinion on his added value. That deserves respect as well. This is why I tune in to Gumshoe. A little long overdue applause for Travis from me and a thumbs up for Mr. Stutman adding to the discourse.

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Slick Rick
Guest
0
Well I had bought and sold ANY for a slight loss, awhile back , but thank you to Travis and Dr Kiss for their inputs! Currently my favorite stock , and one I own is TPIV. Yes TPIV is a risky OTC 97 Cent BioPharma with HUGE potential, and IMHO looks like it may have bottomed out right at this point. Here is the Chart http://schrts.co/xkiVVM and if you are serious about TPIV please refer to this link , for perhaps all you need to know about this stock ! http://investorshub.advfn.com/boards/read_msg.aspx?message_id=113527205 After reading the link in the previous sentence ,… Read more »
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hendrixnuzzles
Member
9935

Gotta love a newsletter guy who comes right up and says hello on Stock Gumshoe.

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Jeff
Guest
0

Hendrix… what I love more is Travis’ offer of sending me $1,000.00 if I send him $1049.00 first… touché~ Travis. Now that was well done.
As far as Stutman’s adventure to come over here, he clarifies that he wishes that Travis would have only told his paid subscribers. This doesn’t mean anything to me and coming over here to defend/protect his position is just “business.”

Daytrader2018
Guest
0

Thanks Rick I recently checked out a great soon to be giant This company is the only one I found in this technology of development of a Field Sobriety Test Breathalyzer to show THC level a Canadian Firm Stock Symbol BLOZF now trading at 1.35 Cannabix Technolgies.
This is needed by all Police in US and Canada that goes fully legal usage on October 18,2018 I see it at between 5 to 10.00 once they get the models they have already tested and passed into production
Check it out do your own DD ….Andrew

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Pepsi
Guest
0

As someone who has intimately followed $ANY since the beginning, I will echo (haven’t read the newsletter) Stutman’s sentiment RE: Sphere 3D. Not going to pump it, just believe it deserves some due diligence.
Good luck to all,
Mike

Logan
Guest
0

Why did you even bother to write this article? The take home message for “BUYOUT IMMINENT FOR A $3.00 STOCK?” is “Maybe you should or maybe you shouldn’t”….a “recommendation” that can be made about 90% of all under-capitalized microchip “story” stocks like the one you reference…

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hipockets
Member
1229

Jeez, Logan. 🙁 Why did you even bother to make this comment?

Griffin
Member
2870

Cut Travis some slack he just got back from vacation. He missed the rumor while he was gone refer to his post 2179 above, No reason to be so NEGATIVE.

jav13037
Member
37
I am having a problem here. Money at CNN says that last years earnings growth was -289% Seeking Alpha shows Q1 Y/Y revenue +2133.3% When a company increases revenue by 20 times, how do earnings fall? The positive press and revenue growth have my attention. This stock definitely has momentum. I think the prudent thing to do right now is to see how Greece and China effect our markets. Small caps normally get beaten up disproportionately during corrections and the are some interesting storm clouds brewing. The effects should be revealing them elves within the next 2 weeks. Any pullback… Read more »
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psvenna
Member
106
I’m glad to see we are on the same page, Travis. In Dr. KSS’s Frontline Dispatch from the Cholesterol Wars thread, post #8 on June 24, I mentioned, among other things, that IBM is using a configuration of Docker, Blumix, and OpenStack, and that the commercial version of Docker, (Docker Trusted Registry) would be available not just from Docker, but from Amazon’s cloud computing business, IBM, as well as from Microsoft. I embedded a number of links to other sources referencing where I obtained my information. In my conclusion I stated: ”In summary, Sphere 3D is sitting among some well-established… Read more »
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Jeff
Guest
0

I totally agree with that assessment.
This is just the beginning of “the Internet of things” and; the band played on…

terry browning
Guest
0

LOL!…post of the day!….I, myself, am waiting for that amorphous, ‘Internet of Things’…………………..found a fair dinkum of, ‘send your $$$ to this now!’….sites…

DaveologicalSociety
Member
41

My take on Gumshoe- No absolute recommendations, just explanations and discovery with a take away to think about, and study on our own before making our own decisions.

Roymond
Guest
0
I love the refreshing change here from all the crap hype I get forwarded by friends from the Money Morning coterie! They give a pitch, and a “Read More” button that inevitably leads to a video with half an hour of words before it says anything. I’ve gotten seven (yes, 7!) different messages about this “$3 miracle” (and other labels) from Dr. KM and cohort, wincing every time at the thought of another long video by someone who loves to hear himself talk. But you give it short and simple and to the point! Keep up the good work.
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Richard Lemke
Guest
0
This is why I will still be broke when I die. After 24 years, 7 months and 16 days serving in the United States Army, I still haven’t invested in the stock market. I never got a tattoo, although I’ve wanted many and I’ve never invested in the stock market. I really wish I would have studied more when it comes to the markets. I guess I will only have the best advice on how to turn people into pink mist to pass on to my grandson. You guys are like swimming in a waterless pool with land sharks everywhere.
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hipockets
Member
1229

Thank you for your service, Richard, and I wish for you the very best of everything. And welcome to the group – I’m glad you are here.

Vern Sumnicht
Guest
0
You risked your life for me Richard … thank you. I’ve been helping people with their investments for 33 years now … after getting an MBA and CFP. It would be an honor to help you get a start investing in stocks. You don’t need a Ph.D. to invest in stocks … you are better off without one … your best education is a little common sense. You’ve obviously got plenty of common sense. The stocks discussed on this website aren’t what you need .. leave them to the land sharks. Don’t pay for any newsletters, websites or videos. Despite… Read more »
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Gr8Full!
Member
11343

Vern, this maybe the A number One post of the day///Thank you for sharing. Check out interactivebrokers.com for a trading account as it is #1 at Barrons. Best2YouAlways-Ben

Virginia
Guest
0

Read an article in my Forbes magazine, Issue July 20 regarding Docker. Assume that is the
business you are referring to. They have a good future.

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M Wayne
Guest
0
If not mistaken, an outfit that goes by the name of How To Find Big Stocks found this company about two years ago and brought it to their subscribers around $1 a share. From what I’ve been able to gather from all their newsletters (free if you know where to look), there is a large short position in Sphere 3D’s stock on the Nasdaq presently, but what many investor’s might fail to realize is also a huge unreported short position that existed on the Canadian exchange they came off of and still exists! In fact, it was larger than the… Read more »
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Rog cook
Guest
0

I was all set to buy, but then looked at scamologist.
https://thescamologist.wordpress.com/tag/sphere-3d/page/2/
And seeking alpha
http://seekingalpha.com/article/2298785-sphere-3d-rewarded-for-a-shotgun-wedding-thats-doomed-to-backfire

There are some extremely dodgy characters as directors!

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Griffin
Member
2870

I don’t know that now would be a good time to get in. There was a bit of jump with the conference and the announcement that their software was in the Windows store. I sold most of my position for a small profit on a two month hold, I’m happy. I still have a small position that I my add to on the dips, but I need to due some research on cloud software first.

vanuatu
Member
0

Something is moving the stock. After going down since July it’s been spiking up last Friday. Any informations here?

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steveinfla
Member
1

Btw, ANY is currently @ $1.36

Frank P.
Guest
0

$Any is currently at $0.30 as of Feb. 15, 2017. Wow!

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