Bireme Capital: “Kodak (KODK) is a Perennial Pretender”

Bireme Capital, an investment management firm, published its fourth-quarter 2020 Investor Letter – a copy of which can be downloaded here. A net return of 47.1% was recorded by the fund for the year end 2020, outperforming its S&P500 benchmark that delivered an 18.3% return. You can view the fund’s top 5 holdings to have a peek at their top bets for 2021.

Bireme Capital, in their Q4 2020 investor letter, said that Eastman Kodak Company (NYSE: KODK) had a declining revenue and negative free cash flow every year since 2007. Bireme Capital identifies Eastman Kodak Company as one of the companies they treat as great pretenders. Eastman Kodak Company is a photography and printing company that currently has a $632.8 million market cap. In the past 3 months, KODK delivered a 3.98% return and settled at $8.07 per share at the closing of March 4, 2021.

Here is what Bireme Capital has to say about Eastman Kodak Company in their Q4 2020 investor letter:

“Kodak (KODK) is a dying photography and printing company. The company has had declining revenue and negative free cash flow every year since 2007. In August, KODK announced that the Trump administration would give it a $765m loan to manufacture key pharmaceutical ingredients, a capitalintensive and low-margin business dominated by Chinese firms. KODK’s shares went parabolic, soaring as much as 20x in two days — a preposterous ~$2.5b increase in market cap based on a
purported entry into this challenging industry.

Not that KODK is likely to get that loan anyway. The loan is on indefinite hold. The inspector general of the government agency that approved the loans is investigating the terms. The SEC is also investigating allegations of insider trading: the day before the loan was announced, the KODK CEO was given 1.75 million stock options, some of which were immediately exercisable. Within days these options would be worth $50m.

KODK is a perennial pretender. Comically, KODK’s shares briefly tripled in January of 2018 when it attempted to capitalize on the first cryptocurrency bubble by announcing “KodakCoin,” a cryptocurrency to “empower photographers and agencies to take greater control in image rights management.” Needless to say, that never came to fruition.

Though well down from their most absurd highs, KODK shares persist at >4x unaffected August levels, because “pharmaceuticals.” “

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In December 2020, we published an article Worm Capital’s Eastman Kodak Company (NYSE: KODK) investment thesis. KODK delivered a massive 190.11% return in the past 12 months.

Our calculations show that Eastman Kodak Company (NYSE: KODK) does not belong in our list of the 30 Most Popular Stocks Among Hedge Funds. As of the end of the fourth quarter of 2020, Kodak was in 12 hedge fund portfolios, compared to 15 funds in the third quarter.

The top 10 stocks among hedge funds returned 231.2% between 2015 and 2020, and outperformed the S&P 500 Index ETFs by more than 126 percentage points. We know it sounds unbelievable. You have been dismissing our articles about top hedge fund stocks mostly because you were fed biased information by other media outlets about hedge funds’ poor performance. You could have doubled the size of your nest egg by investing in the top hedge fund stocks instead of dumb S&P 500 ETFs. Here you can watch our video about the top 5 hedge fund stocks right now. All of these stocks had positive returns in 2020.

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Disclosure: None. This article is originally published at Insider Monkey.