Globalstar, Inc. (GSAT): TLPS Story Not Over Yet; Long Investors Are Winning

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Until the TLPS system receives approval from the FCC, the statements of both types of investors (long and short) are mere speculation. Both groups have their own agendas, which they try to pursue. Maglan has a long position in Globalstar, Inc. (NYSEMKT:GSAT), so it is betting on the company’s growth, therefore it is interested in the positive aspects that TLPS might provide for the company. On the other hand, Kerrisdale has been mostly bashing on GSAT throughout the fourth quarter of 2014. Moreover, something interesting appears when we look at its two latest 13F filings. In the 13F for the end of the third quarter, the fund reported a big position of put options underlying around 1.99 million shares of Globalstar, but the next 13F filing (for the end of 2014) shows that the position was closed, with the options being exercised or expiring. Meanwhile, during the October-December period, the stock of Globalstar lost nearly 25% amid an inflow of comments and letters issued by Kerrisdale, the last of which was on December 8 according to its website.

On the other hand, Globalstar, Inc. (NYSEMKT:GSAT) has remained mostly silent throughout the fourth quarter, which should also raise some questions regarding the self-assurance of its management regarding the prospects of the company. The only comment issued by Globalstar was a short statement in response to Kerrisdale’s huge, 64-page report that claimed that the company was actually worth nothing. That statement actually failed to disprove almost anything mentioned in the report, mainly attacking Kerrisdale as a short-seller instead.

The short interest in Globalstar is not very large, as many investors probably took the opportunity to make some money during the fourth quarter. Many investors aside from Kerrisdale unloaded their positions in ‘Put’ options during the fourth quarter. Long interest also slightly declined as data from Insider Monkey shows. At the end of December, a total of 26 funds (among over 700 that we track) reported long positions, versus 32 funds a quarter earlier. James Dinan’s York Capital Management is the largest shareholder with 33.26 million shares, although the stake amasses less than 1% of its equity portfolio (see York Capital’s portfolio). In terms of portfolio allocation, the largest position is owned by Kieran Goodwin‘s Panning Capital Management, which disclosed ownership of 11.51 million shares, the stake being the third-largest in its equity portfolio.

Therefore, the fate of Globalstar, Inc. (NYSEMKT:GSAT) and the earnings of investors are in the hands of the FCC. After TLPS is approved, the company will get a chance either to prove short-sellers wrong regarding its potential, or significantly disappoint those that have been bullish.

Disclosure: None

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