Thread by @DesoGames

Alright. FIRST SHORT REPORT!

THIS IS NOT FINANCIAL ADVICE! I say this because i've never done this before; And i wanna see if i can find absolute dogshit at or near the top as good as i find absolute gold at the bottom, based on fundamentals alone.

AND THE TICKER IS 🥁

$IRM

As you can see, 1,100%+ debt to equity is quite excessive. Combined with my favorite measure, Book value per share, at an eye popping -16.8, i decided to immediately take a closer look. Especially at $32.26 a share! This is no penny stock.

There's more that didn't line up.

Market cap is $9,27 billion, but enterprise value is $20,27 billion. This is quite a spread, and usually indicates undervalue (which is how i got attracted to it in the first place).

However. P/E ratio is 69.91!

Now they can't both be right. There's gotta be a reason.

But the price to book is 9.89!

Well, when it's 2 to 1, with so much debt to equity and a deeply negative value per share - my instincts say i have to assume Enterprise value is wrong and i should dig to find out why.

I always go for the income statement first:

First thing i notice is rental revenues haven't really been impacted by the pandemic. Logical i suppose for a datacenter/high value storage company.

But "Other" got smacked in the face.

Other then that, it's just flat earnings... Until i hit writedowns/goodwill.

Nothing?

Their "Unusual items" are increasing though. After the 2020 crash. After being blank for years.

Coincidence, i'm sure.

When it comes down to earnings, i always look at Net earnings. No point in earning billions if you're losing millions.

And they're... Small. Very much so.

The long term stats are *much* worse... It's clear that this company was on the decline *before* 2020. Infact, it was dying since 2018.

What's not shown in the screenshot is what's below it; Share Earnings. Which i *always* check cause it lists dilution.

No dilution.

But HOLY HELL does it list dividends!

They INCREASED dividends, even in 2020!

With a payout ratio of 536,51% in 2020!!!

With a debt to equity of 1,100%?! THAT gets my attention!

So i checked the dividend yield.

And hohooolee smokes.... Wait, i've seen that pattern before...

You piqued my interest, but now you have my attention.

Let's look at the balance sheet. And for the uninitiated, i've grabbed a similar screenshot of $AUY - Yamana, a gold/silver miner which i consider a good and undervalued company, for comparison.

And... well they're broke.

The top tells me enough already. As a value investor i look for companies who expand their operations and innovate, as standing still is death in the corporate world.

But continuous expansion is unhealthy. Expansion's ALWAYS fueled by debt. It requires time to be paid back.

Leaving no breathing room to pay back debt tells me management isn't concerned with profits or actual management - they're concerned with blind expansion.

This is very important because when you expand for nothing else but expansion, *the quality of assets you buy suffers*.

Doesn't matter if it's a great deal, or even a good deal, as long as it's a deal. And a Phat one, preferably.

Considering they damn near tripled their property in 5 years - they got a few.

My issue is that earnings are flat. And paying back debt becomes cumulative.

So even while property increased by 33% since 2018, revenue is down 2-3%. That got paid for, and since they have tiny earnings, it got paid for by debt - confirming the ridiculous debt to equity number.

The liabilities confirm as much. And the problem here is deprecation.

They must've bought a few duds because while total assets went from $5,5B to $10B in 4 years, net assets went from $3B to $6,4B - increasing the spread from $2,5B to 3,6B.

But no writedowns.

Before looking at Debt, there's another discrepancy: The Goodwill is *insanely high*

I had to actually check with Yamana if this was normal, but nope. They have goodwill that exceeds a years worth of revenue!

Their liabilities are *weird* too. The numbers don't line up. At first i was fine with calling bullshit, but i got the itch to dig:

Goodwill *actually exceeds property!* Regardless of leases, an effective goodwill of $7,9 billion on $6,4 billion of real estate assets for a REIT is *ridiculous*.

I can only assume it's still there because of VERY scared creditors. I wouldn't waste gas to burn these financials.

Gets worse, of course. I had to google what "Additional paid in capital" was after i saw it was worth billions. Added what i found in the screenshot.

So basically on $1 billion of equity, with $12 billion of liabilities backing it, there's a $4,4 billion premium.

Equity has been *absolutely annihilated* since 2017: Minus 1,36 billion.

Again, i've included Yamana to show you what an undervalued company looks like: Decent goodwill, They had a debt problem too *but reduced it*, reduction in equity was explained by a mine writedown etc.

And more importantly i had to check the additional paid in capital stat for Yamana to see what's normal for something with barely any premium. As i thought, it's supposed to be low for value. So the opposite holds too (well, conditionally, always).

Finally there's the float.

Virtually all shares are traded - meaning no insider confidence. This is shown by the 1,05% insider holdings. As i showed with the dividend screenshot, this is *so low*, that they must pretty much be selling stock compensation into the market as they go along.

Whats further weird is that they haven't diluted.

At all.

EVERYBODY dilutes a bit. Especially to reduce debt, because a share price is easier to grow with no debt then with alot of debt... As IRM shows.

They have 288 million shares, and 12,6B in liabilities. That's insane.

*Revenue per share is 14.47!*

There's only one reason at this point why they wouldn't dilute to repay debt in order to restore growth:

They have no faith anybody will buy into a open share offering.

Because they're Fucked. And they know it. Hence the insider selling.

Finally, why hasn't anybody asked any questions?

That ol' fashioned motivator.

Greed. Backed by brazen charm. *ALL* those statistics i just ripped apart for being dogshit?

*They advertise with them!*

Who WOULDN'T want a tech company with more dividend then Gazprom?! (6,75%)

Honestly i haven't looked deeper then that front page and the quarterly to check what the discrepancy was.

If it looks too good to be true, it probably is.

They HAVE to go down, because they're either worthless, or will dilute to save their worthless ass WHEN credit dries up.

Lets see how it does :D Q4 results tomorrow. neg revenue expected...

FYI - i have no money on this. Ol' fashioned bragging rights only :D

Lemme know whatcha think!

#Wallstreetsilver #WSS #silverbacks @goldsilver_pros @PalisadesRadio @WallStreetSLVR @TheEarlyStage #fintwit $IRM