From CNBC: Sahm Adrangi’s Bleak Kodak Report


Eastman Kodak Company (KODK), a commercial print and imaging company who’s stock peaked at $37.73 in 2013, has been on a continuous slide down every since and finally punched below $3 at the end of 2017. Kodak seems to have found a way to stop the slide by announcing at the beginning of 2018 that they’ll be entering the blockchain/crypto space.

Kodak plans to create a blockchain-based image licensing platform along with a photo-centric cryptocurrency. On 1/9/19, KODAK and WENN Digital announced a partnership for KODAKOne and KODAKCoin. Shares of KODK shut up by 400%, from a low of $3.05 to a high of $13.28. The party didn’t last long as KODK began heading lower. It closed at $5.85 on Monday (2/5).

It might be difficult to find the business case for Kodak integrating blockchain technology.

Sahm Adrangi of Kerrisdale Capital would agree that it is difficult to find such a business case because one likely does not exist. Additionally, the team behind the effort, called KODAKCoin, has no credibility.

In fact, Kerrisdale Capital issued a negative report on Kodak, as first mentioned on CNBC. You can find the full report at Kerrisdale Capital has also taken a short position in the stock.

Kerrisdale believes the announcement by Kodak is an attempt to ride the cryptocurrency ICO (initial coin offering) craze. Kerrisdale points out that Kodak’s financial structure and business model are unsustainable.

Kerrisdale believes KODAK’s concept is flawed and that the company is simply using buzzwords such as blockchain to attract attention away from the company’s core problems.

One such example is the explanation of the planned KODAKOne platform by Bill Elliot, WENN Digital CMO’s, “We can get a photo, lock it into our blockchain, then we can sort of assign the IP to the individual, then we can look through the entire internet and find where that photo is being used, and if it’s not being used correctly, then we can reach out to them with an automated system that says, ‘hey, you might not have known that you’re using this photo without a license, why don’t you get a license to that’, and then that money comes back and gets paid back to the photographers, and that whole transaction happens with that KODAKCoin cryptocurrency.”

Is KODAK really focused on a new fundamental technology that will change photography? We leave you with this quote from Jeff Clarke, CEO of Eastman Kodak from January 9, 2018, “This doesn’t change the fundamentals in a way that means the stock should double.”

Why not? Why doesn’t the CEO believe this can double the stock, making it worth hundreds of millions of dollars?


About Kerrisdale Capital

Kerrisdale Capital Management, LLC, is a fundamentally-oriented investment manager managed by Sahm Adrangi that focuses on long-term value investments and event-driven special situations.



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