Fairway Group Holdings Corp. (NASDAQ:FWM): Fairway Group Holdings Corp. operates as a holding company with interests in food retail stores. The company focuses on perishable product categories, which include produce, natural and organic, deli, specialty, cheese, butcher, seafood, bakery, coffee and kosher foods. Fairway Group Holdings was founded by Nathan Glickberg in 1933 and is headquartered in New York, NY.
In September of 2014, the company named Jack Murphy as its new CEO. Mr. Murphy was a co-founder of natural foods grocer Fresh Fields, Inc. before it was sold to Whole Foods Market, Inc. (NASDAQ:WFM), and most recently he served as CEO of Earth Fare, Inc., an organics and natural food chain with locations in the Southeast and Midwest.
One of our sources contacted us about this company after hearing some buzz that Whole Foods may be interested in acquiring the company. Murphy has a strong history as a turnaround CEO that cleans up, leans down, and then sells companies. Fairway has 14 stores in the New York City area, but Whole Foods has only three. For Whole Foods to go out and actually lease and/or buy property to gain a presence in such a large market would not be cost effective.
Fairway’s current market cap is around $170M, so for a modest and fair premium, Whole Foods can acquire Fairway’s outlets to gain a presence in the huge NYC market for a cost much more company-friendly than the alternatives. Considering Murphy’s relations with Whole Foods and the obvious synergy here, we feel strongly that the rumors we are hearing will turn out to be true, and Whole Foods will acquire Fairway sometime this year for around $300M.
Additionally, Fairway has a large short interest from its past hardships before it hired Murphy as the new CEO. We strongly feel this one could see a big short squeeze as traders and investors do some deeper due diligence.
Identiv (NASDAQ:INVE): We have extensively covered Identiv over the last few months and know its story very well, but the overall market has not yet caught on to this one. Up until just about two weeks ago, the company was handling investor relations internally due the fact that the new management team had to “lean down” the company and save it from insolvency back in late 2013. The company now has hired SVC, a well-known and top IR firm.
Recently, the company’s $20M line of credit from Opus Bank was upped to $40M and the interest rate cut from over 6% to approximately 4%, with the first payment moved from 2015 to 2017. We know that Opus has a non-disclosure agreement with Identiv, so what does it know that inspired them to double the line of credit, lower the interest, and move payment out two years? The answer might be found in patent filing US 20130061303 A1 that Opus holds as collateral for the loan (on bottom of the linked page, note that Opus is now assigned the patent filing).
From the filing we read,
A method of providing continuous authentication in a contactless environment is provided. The method includes providing a reader having a contactless interface, as well as a device, operable to communicate with the reader. The method further includes the steps of receiving at the reader a first authentication request from the device, and communicating from the reader a second authentication request to a secure transaction service. The secure transaction service holds authentication credentials relating to the device. Authentication credentials relating to the device are received at the reader from the secure transaction service, and the reader provides continuous authentication based at least in part on the authentication credentials received from the secure transaction service.
We think Identiv and Apple (NASDAQ:AAPL) have some sort of connection here with this technology, but we aren’t sure what it is. It would be reaching for us to speculate that it may have something to do with the Apple Watch, but it’s possible. We do know that CEO Hart has mentioned in conference calls before that the two companies do have a developmental deal.
Obviously if it was a deal involving Apple Watch, Hart would not be able to speak on it. What we do know we have mentioned above, that Opus knows something that caused them to give Identiv much more favorable terms on its line of credit. Nonetheless, with Apple’s recent blow out earnings for Q4, Identiv is sure to receive some attention, notwithstanding that the company now has a top IR team to “pitch” its story to the institutions.
Additionally, the company has opened its new Identiv Labs division, which is involved in “The Internet Of Things” ((IoT)) segment, and is guiding revenue up this year to around $105M to $110M with a near breakeven forecast. This is quite an accomplishment that most of the market simply does not know about – Identiv is a stock that small-cap investors should take a close look at.
Synergy Pharmaceuticals, Inc. (NASDAQ:SGYP): It was predicted by several analysts that Synergy’s stock would be trading in the double digit price range by now, with Aegis Capital assigning a price target as high as $25 a share. Obviously, this did not materialize as the company moved its main Phase III data release out to Q2 of this year and also has engaged in very dilutive financing which has hurt the stock price.
However, just recently 28 million shares have become “unlocked” from one of those financing deals. Synergy has a large short interest of about 13M shares, of which most are being held by those shareholders whose shares are now unlocked. Those shareholders paid a price of $4.23 a share, so as of right now, those shares are far out of money, so to speak.
In order to break even and even make profit from those shares along with collecting money from their short positions, there will have to be a large short cover. We feel this short cover has begun and should intensify as the company nears a very large catalyst – top-line data results from the first Phase III Chronic Idiopathic Constipation (CIC) trial of plecanatide in 2Q 2015. The company plans to file the New Drug Application (NDA) with plecanatide for the CIC indication in the fourth quarter of this year. Plecanatide 3.0 and 6.0 mg doses also are being evaluated in the ongoing Phase III registration program for Irritable Bowel Syndrome with constipation (IBS-C).
Plecanatide is designed to treat patients with CIC and IBS-C. So far, the Phase II data read out has been successful, and we strongly feel the data in Q2 also will prove to be a success. Some analysts are still assigning a double digit price target for the stock, but we disagree with that. Our price target opinion is somewhere around $8 a share. Some feel Synergy will end up being acquired. We feel this is possible, but we also point out that many larger pharmas are moving away from primary care treatments to specialty care ones. With a successful Phase III read out here, we also believe the other data read outs will end up positive, so we tend to think Synergy will end up as an acquisition, but not before sometime next year.