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Now that $LLNW results are out, I figure I walk through why I thought the quarter had high "bullet dodge" risk (1/X) https://seekingalpha.com/news/3661457-limelight-networks-tumbles-125-amid-swing-to-loss-in-q4-new-ceo-pledges-turnaround
Just so we're on the same page, a "bullet dodge" is when management releases news to tank their stock and then loads up on equity.
In the case of $LLNW, on Jan 20 a new CEO is announced w a Feb 1 effective start but he would not receive his equity grant until after earnings
"These awards will be issued on the second trading day following the opening of Limelightâs trading window"
https://d18rn0p25nwr6d.cloudfront.net/CIK-0001391127/4c81c10e-8056-44d0-8979-e767c884049a.html
"These awards will be issued on the second trading day following the opening of Limelightâs trading window"
https://d18rn0p25nwr6d.cloudfront.net/CIK-0001391127/4c81c10e-8056-44d0-8979-e767c884049a.html
Full disclosure, I initially bought call options upon the press release bc the start date was before earnings and I assumed they may grant equity when he started (pretty normal to do so).
It wasn't until I read the filing that I flipped the calls. https://www.nasdaq.com/press-release/limelight-networks-inc.-appoints-seasoned-growth-executive-bob-lyons-as-new-ceo-2021
It wasn't until I read the filing that I flipped the calls. https://www.nasdaq.com/press-release/limelight-networks-inc.-appoints-seasoned-growth-executive-bob-lyons-as-new-ceo-2021
Now, simply granting post-earnings doesn't immediately mean it's a "bullet dodge" although it's generally not a bad bet for new CEO grants.
What I was paying attention to was 2021 annual guidance (or lack thereof) https://twitter.com/NonGaap/status/1359972604941983746?s=20
What I was paying attention to was 2021 annual guidance (or lack thereof) https://twitter.com/NonGaap/status/1359972604941983746?s=20
Historically, $LLNW provides guidance for the following year in December. For 2021 guidance, it was crickets.
That made be pretty curious given the sell-off after Q3 earnings which was also pre-dated by the departure of their COO announced in Sept 2020.
https://d18rn0p25nwr6d.cloudfront.net/CIK-0001391127/e88edefc-d42c-416d-877c-c4dcdcc3480d.html
That made be pretty curious given the sell-off after Q3 earnings which was also pre-dated by the departure of their COO announced in Sept 2020.
https://d18rn0p25nwr6d.cloudfront.net/CIK-0001391127/e88edefc-d42c-416d-877c-c4dcdcc3480d.html
Suddenly you have a situation where:
- COO is gone
- Q3 blew up
- No 2021 guidance
- Old CEO departing despite getting his annual equity grants in November 2020 (felt abrupt)
- New CEO is getting their equity after Q4 earnings
This is not exactly a bullish (near-term) sign
- COO is gone
- Q3 blew up
- No 2021 guidance
- Old CEO departing despite getting his annual equity grants in November 2020 (felt abrupt)
- New CEO is getting their equity after Q4 earnings
This is not exactly a bullish (near-term) sign
The stock would subsequently run after the new CEO is announced (the previous CEO isn't liked from what I gather) and it probably is "better" for the company long-term to have new leadership.
I still didn't have a good feeling on the Q4 set up. https://twitter.com/NonGaap/status/1359894208757211140?s=20
I still didn't have a good feeling on the Q4 set up. https://twitter.com/NonGaap/status/1359894208757211140?s=20
One thing I felt was odd is the press release announcing the new CEO on January 20 HAS ZERO UPDATED VIEW ON EARNINGS OR GUIDANCE.
Normally, you want to minimize disruption so you will include an update on Q4 financial expectations. The lack of this was
https://investors.limelight.com/news/press-releases/news-details/2021/Limelight-Networks-Inc.-Appoints-Seasoned-Growth-Executive-Bob-Lyons-as-New-CEO/default.aspx
Normally, you want to minimize disruption so you will include an update on Q4 financial expectations. The lack of this was
https://investors.limelight.com/news/press-releases/news-details/2021/Limelight-Networks-Inc.-Appoints-Seasoned-Growth-Executive-Bob-Lyons-as-New-CEO/default.aspx
This wasn't good to me.
LLNW was not doing the things I'd expect them to do to make sure things are "ok" and to quell concerns.
We also had this meaningful overhang with the company not sharing 2021 guidance in December after a pretty bad Q3 quarter.
No bueno.
LLNW was not doing the things I'd expect them to do to make sure things are "ok" and to quell concerns.
We also had this meaningful overhang with the company not sharing 2021 guidance in December after a pretty bad Q3 quarter.
No bueno.
While I was pretty convinced something was up, I always try to check past behavior to see if I can find any precedent of similar behavior.
When I made my checks, there were certainly some well-timed grants that firmed up my concerns.
When I made my checks, there were certainly some well-timed grants that firmed up my concerns.
To wrap things up, while Q4 earnings turned out to be a "bullet dodge" with meh Q4 and suspending 2021 guidance, these situations (with capitulation and new leadership/priorities) tend to be an interesting place to fish afterward.
Finally, if newsletter subs are wondering why I didn't write about this, I'm sorry
I (for now) am self-restricting myself from writing about small caps due to size/volume concerns
I'll do occasional hot take tweets and happy to answer DMs/emails, but not in the newsletter (fin)
I (for now) am self-restricting myself from writing about small caps due to size/volume concerns
I'll do occasional hot take tweets and happy to answer DMs/emails, but not in the newsletter (fin)
