Dow Jones Part 3
Barich, an avowed Actrade bull, said the largest problem the company faces is familiarizing
companies with the TAD concept. Potential clients are more familiar with more conventional
financing terms from banks, factors (they buy all of a companies receivables at a discount), and
leasing companies.
"We fill out a very significant niche," Stonkus said, "You have factors and banks doing receivables
up to three months, but you don't have anyone playing in the arena from three to 12 months. After
that, the leasing companies come in."
Major Wall Street institutions haven't paid much mind to Actrade either, as many
small-capitalization companies like themselves are "orphaned" by major equity-research teams
because they lack the liquid heft institutional investors need to trade in bulk.
"It doesn't mean the concept of the company isn't good, it's just a reality that all small-cap
companies struggle with," said investment banker Stuart Harvey Jr., of Piper Jaffray Inc. That
reality includes thin trading volumes and a very small public float, or shares available for trading.
Piper is not the company's investment bank.
Still, while Actrade may have not yet made a big splash with Wall Street's top tier, it has certainly
caught the attention of short sellers.
There were about 1.6 million shares sold short in Actrade's stock at last tally November 15, down
from 1.7 million a month earlier, a Nasdaq spokeswoman said. But when you consider that
management holds about 27% of the 8.7 million outstanding shares, the shorts account for about
25% of the company's 6.4 million-share public float.
The stock hit an annual low of 9 1/2 on Sept. 1, traveling south over the last year from its high of
30 set Nov. 28, 1997. Actrade was recently trading at 12 13/16, up 1/16. About 110,200 shares
change hands daily.
The shorts have circulated talk about Aharoni's past financial troubles, the company and analysts
said, as well as the stock's overvaluation, a balance sheet that was bleeding cash, amongst other
things.
Aharoni did say he declared personal bankruptcy, which stemmed from a business he ran in Israel
about 13 years ago. A currency devaluation there took a toll on some highly leveraged positions, he
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