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First Derivatives – now tell us about Kx and Shakti: does this make your $53.8m ( which you don't have) a pure spunk?

By Tom Winnifrith, The Sheriff of AIM | Monday 24 December 2018


Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.


Given that its IPO prospectus was fraudulent and how its earnings have been materially overstated in recent years as demonstrated here, only the sort of moron who would back the fraud Globo to the hilt would still be owning shares in First Derivatives (FDP). They are an outstanding short at 2125p. But now lets look at kX and something that might just blow up First early in the new year.

First has pledged to buy out the minority shareholders in Kx by June 29 next year for $53.8 million  million. Of course it does not have that sort of cash in its piggy bank. It has net debt of c$40 million as at August 31 and growing. So it either needs to take on more debt, something banks might not be so keen on given the scrutiny the accounts are under or do a fund raise which may explain why sell side analysts all rate the shares a buy ( they want the commission) but may not be so easy in the current climate and given that the shares have halved in the past few months.

But that is a $53.8 million problem for another time.

The folks picking up that windfall are Kx’s founders who still sit on its board, Janet Lustgarten and Arthur Whitney. How will they spend the cash? Well $50,000 went into buyng the domain name Shakti.com which is set to launch its business next week and appears to be in the same sort of space as KX.

I asked Kx’s CTO Charlie Skelton, who as it happens was at school with me but in the year below, if he would care to comment on what was happening at Shakti. Come on Charlie, floreat, floreat, schola Warwicensis and all that…  Sadly Charlie declined to comment.

Anyhow good luck to Janet and Arthur with their new venture and with First legally on the hook to pay them out come what may, they should have some firepower behind them.


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