Long or Short? TUI AG, AdTiger, Grenke, AMC Entertainment

TUI AG - Difficulties remain despite state aid

TUI AG remains the plaything of the pandemic speculators. With each further lockdown extension, the share price takes another hit. After government aid of over EUR 1 billion, the share stabilized towards EUR 5 but is now back down to EUR 3.67. From an operational point of view, one can understand the concerns because "security" plays a considerable role in booking tourism services. People want to plan their vacations, and in the event of the tour operator's insolvency, the Company should return the money paid in full.

Against this background, our government members have now decided that there should be a security fund worth millions in the future. However, the tour operators themselves are to contribute to this fund. As a result, the previous security provided by insurance or bank guarantees will be replaced in principle. The background to this is the Thomas Cook travel group's insolvency in September 2019, when the insurance Company only reimbursed a fraction of the costs because the total liability was limited to EUR 110 million per year. By mid-November, the state had to step in and had paid out almost EUR 40 million to Thomas Cook customers whose trips had fallen through.

And again, the question arises: Can TUI survive in this environment and return to old booking figures after the pandemic, assuming there is an "after." Probably not - because the travel behavior of Germans is changing permanently. Apart from a certain catch-up effect, the tourism level of 2017/18 is unlikely to be seen again. Therefore, TUI AG remains a plaything of the news situation - whether long or short, the speculator decides.

ADTIGER - The music plays in Asia

AdTiger moves far away from obscure speculation. The advertising specialist from China runs a solid business with advertising content on well-known social media platforms. It draws strong benefits from the use of Big Data and artificial intelligence. AdTiger uses its proprietary software AdTensor, which it developed in-house, to optimize ad slots and ad times and maximize its ads' reach.

Based in China, the Company specializes primarily in customers who take an international approach to business. This generates reach beyond the borders of the Chinese wall and makes a name for itself in neighboring countries, which will help with potential expansions. The agency's partners read like a storybook of the online industry, with names like Yahoo, Facebook, Baidu and Google making the rounds. The agency is also involved with modern tools like TikTok because the young and affluent clientele is predominantly found there. Of course, cross-referencing to other channels is achieved by networking the platforms with each other. An excellent and well-rounded business model!

With this strategic focus and its cutting-edge solutions, AdTiger is ideally positioned for further growth. The Company operated profitably in 2020 and has no debt despite high growth. With a market capitalization of around EUR 77 million, the Company is trading at a price of EUR 0.12 in Frankfurt. You should be long here!

Grenke AG - What's the truth of the rumors?

Out of nowhere, the German leasing Company Grenke was confronted with serious allegations last September: Fraud, money laundering, accounting fraud. Grenke makes its money by leasing IT and technology products to other companies and similar services up to and including banking products. The group is accused of not presenting the financial transactions associated with its services transparently enough. Auditors are, therefore, once again called upon to shed light on the accounting jungle.

What is now feared is another possible financial scandal in Germany, quasi a kind of "Wirecard 2.0". On Tuesday, the group announced via ad hoc release that the long-serving board member and compliance chief, Mark Kindermann, relinquishes all duties with immediate effect. The Company's share price subsequently slumped by 38% to as low as EUR 24 at its peak. Back in September, the investment house Fraser Perring drew attention to itself; they had set the ball rolling at Wirecard in 2020 with massive short positions.

Company founder, major shareholder and Supervisory Board member Wolfgang Grenke already vehemently rejected the accusations in September and commissioned immediate special audits. Consequently, Grenke published positive reports about the audit by KPMG in recent months, but the sudden departure of board member Kindermann now comes as another shock to investors. Trust is a shy deer, especially after the events surrounding Wirecard, where there is now an unpromising class-action lawsuit. Caution.

AMC Entertainment - Another poor example of stock culture

The social media speculation wave around Reddit also claims victims among large investors. Especially when it comes to long-term investors, significant price fluctuations can lead to massive uncertainty and cause lasting damage to a stock's investor base. In the case of AMC Entertainment's stock, it was solely the high short ratio that drove the many followers into the stock, with the price landing at the peak of just under USD 20 and standing at USD 5.7 today.

A large investor in AMC Entertainment is Wanda Group. It may have missed the opportunity to profit from the short squeeze on the cinema operator. Because its holdings were tied up in AMC Class B shares, for which there was no significant market, it could not take full advantage of the 800% rise in Class A shares. Wanda attempted to correct the situation by exchanging shares, but this cost valuable time.

AMC did not disclose how many shares Wanda converted; however, the purpose of Wanda's intended sale was made public. Since the conversion took place on February 1, it is possible that Wanda still earned substantial gains. Many smaller investors may not have been able to do so. A sad example!