NEW YORK (TheStreet) -- Synthesis Energy Systems (SYMX) shares are climbing, up 67.50% to $1.81, in trading on Monday after it was revealed that John Paulson, hedge fund manager of the $19.3 billion Paulson & Co. hedge fund, established a new 10 million share stake in the energy and chemical industries products, and solutions provider.
Paulson purchased what amounts to 11.7% of the company's outstanding shares on April 14, the same day that the company agreed to a direct placement of 12 million common shares for $12 million to "certain accredited investors", though it did not reference Paulson by name.
Paulson & Co has $30.85 billion assets under management (AUM) and the industrial sector represents about 12% of its equities portfolio, according to OctaFinance.
TheStreet Ratings team rates SYNTHESIS ENERGY SYSTEMS INC as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:
"We rate SYNTHESIS ENERGY SYSTEMS INC (SYMX) a SELL. This is driven by a number of negative factors, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity, weak operating cash flow and generally disappointing historical performance in the stock itself."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Energy Equipment & Services industry. The net income has significantly decreased by 1683.5% when compared to the same quarter one year ago, falling from -$1.44 million to -$25.59 million.
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Energy Equipment & Services industry and the overall market, SYNTHESIS ENERGY SYSTEMS INC's return on equity significantly trails that of both the industry average and the S&P 500.
- Net operating cash flow has significantly decreased to -$5.48 million or 251.18% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 36.12%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 1650.00% compared to the year-earlier quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
- SYNTHESIS ENERGY SYSTEMS INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This company has not demonstrated a clear trend in earnings over the past 2 years, making it difficult to accurately predict earnings for the coming year. During the past fiscal year, SYNTHESIS ENERGY SYSTEMS INC continued to lose money by earning -$0.21 versus -$0.34 in the prior year.
- You can view the full analysis from the report here: SYMX Ratings Report