Following another piece published by us, US Stem Cell Inc (OTCMKTS:USRM) does not stop climbing. It even jumped almost 10% yesterday with no news. We wanted to find communications today about the company to explain this behavior, but could not find any. This kind of situation is when you say: wait a second. There is something that we did not cover and it is, for sure, influencing the stock price. Just take a look at the price:
The hidden deal with GACP - is this important?
We went back to read every single communication of the firm. We wanted to find out something that maybe a few investors figured out and we did not see; something that we did not cover. And we found out the following. On March 3, 2017, the firm entered into an asset sale and lease agreement with GACP (General American Capital Partners) Stem Cell Bank LLC, a Florida limited liability company (“GACP), to sell some assets, equipment and banking cell culture for an aggregate of $500,000 in cash. In addition, the company also signed a sale agreement to lease the equipment assets for a period of three years.
Read for yourself the communication:
"Simultaneous with the sale of the Equipment Assets, the Company leased back the Equipment Assets for a term of three years. The purchase price for the Human Banking Business was Four Hundred Thousand Dollars ($400,000) for the actual equipment, plus $50,000 for non-equipment assets specifically related to the banking business—plus another $50,000 for customer contracts related to the bank . As consideration for the lease back of the Equipment Assets, the Company will pay base rent of Twenty thousand Dollars ($20,000) per month plus a graduating payment of percentage rent for each of the three years." Source
We are not going to claim that the cash received by the company is a big amount, but that is not the key part. This communication is a sign, which means that the company is looking for ways to generate more money for the shareholders. Some clever business executives are saying: we need to make this company much more efficient, let's sell these assets and lease them.
Shareholders appreciate companies with solid cash flows and strong balance sheet, but above all they look for management that looks for every penny in the company. With this decision, the management of the company is sending exactly this message to the market. Did this new agreement create the recent uptrend in March? Maybe yes or it could be this communication together with the fact that the company released very good financial figures earlier this month. Investors, surely, never act only on one headline.
Institutional Shareholders
There is another very good factor that other retail investors may not be aware of right now. The company is being bought by institutional shareholders. These are sophisticated investors, who know very well when the shares of a company are ready to rise. It is always important for the small shareholders to monitor what are the big boys doing. In this case, right now they are buying, and they have been buying from the beginning of 2016. The following institutions own or owned a significant amount of shares in this company:
- TELLURIDE TOO, L.L.C.
- Daniel James Management, Inc.
- FOURTH MAN, LLC
- VIS VIRES GROUP, INC.
Didn't we tell you that something was going on? We don't really know whether they invested because they saw a change in the direction of the company or because of the financial figures of the firm, but either way, they're sitting on big profits right now. In any case, we encourage you to read more information about U.S. Stem Cell Inc. in order to have your own opinion.
Conclusion
The stock price of the company has been in an uptrend. It is at the moment reacting with no news, so we wanted to investigate the company a little further. We figured out that the company reached a deal to sell some assets and a lease agreement with another party that the market may have appreciated. In addition, institutional shareholders have been buying these shares for a long time and maybe other investors are becoming more interested due to this reason. In any case, it seems interesting to be informed about this company and its communications since some shareholders have made big money here.
We will be updating our subscribers as soon as we know more. For the latest updates on USRM, sign up below!
Disclosure: We have no position in USRM and have not been compensated for this article.
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