This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Authentidate: Big Bet On A Small Company

The following commentary about health stocks was written by Ankit Gupta, who blogs about investing at Selected Financials.

Authentidate (ADAT)

On Tuesday, Authentidate announced $3.4M of capital being raised through the issuance of common stock and warrants, underwritten by Rodman & Renshaw (RODM)

The warrants are only good for 90 days, though, and exercisable at $1, with the stock recently trading right at $1. There is a clear bet from the investors that something will happen in the next 3 months, causing the stock price to go significantly above $1, making those warrants actually worth something. If the stock stays at its current level, these warrants could be worthless.

In the last quarterly report, we saw inventory for telehealth devices increase. These are sold through ExpressMD. The data in the following table image comes directly from their quarterly report. For a company that has such little cash, had to raise $3.4 million, get emergency financing for $3 million from a board member's family member, this is a significant move.
Inventory (in thousands)
   Sept. 30, 2009
 June 30, 2009
 Purchased Components
 $749  $312
 Finished Goods
 $181  --
 Total Inventory
 $930  $312

                                                                         Source: Authentidate quarterly report.

With investors putting money on the line for 90 day warrants, and Authentidate increasing inventory of a proprietary device, let's take a look at some other signs pointing to something coming up:

First, they have a telemonitoring device with FDA approval that competes with Intel (INTC - Get Report)

In the most recent conference call, management talked about hiring somewhere around 20 employees to support the rollout of these devices. With their limited amounts of cash, this is only going to happen if there is immediate work that is the result of a contract they have been awarded. The fact that they're talking about it is a strong sign.
1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
ADAT $3.49 0.00%
INTC $30.61 0.00%
PHG $27.62 0.00%
RODM $24.29 0.00%
AAPL $93.64 0.00%


Chart of I:DJI
DOW 17,891.16 +117.52 0.66%
S&P 500 2,081.43 +16.13 0.78%
NASDAQ 4,817.5940 +42.2360 0.88%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs