Update on $JAKK, my earlier Substack post and an opportunity that I continue to be super excited about. I have some detailed thoughts about why the near term setup and r/r is exceptional 🧵👇
https://twitter.com/Plum_Capital/status/1410968010119122944
Recent peak share price was $15.37/share on July 7th. The shares are now trading at ~$10.25, a whopping 33% decline when fundamentals have not changed at all. What happened and is this justified?
As you can see, $JAKK trading volumes increased significantly in July. Now, I am definitely not so conceited as to believe my article caused this, though it may have added a couple eyeballs here and there 
So why did this happen? Well, remember that $JAKK has some Senior Notes that have a conversion option to Common Equity. Given the debt refi earlier this year, the Notes will mature on September 1st this year.
Now for the interesting part. The language in the documents governing the Notes prohibits holders from converting and owning more than 5% of the Common Equity on a PF basis:
Let's not forget the conversion price is $5.647, so the Converts are super in-the-money right now. So, this means that the Converts must convert between now and September 1st, otherwise you will be redeemed at face value, a terrible, terrible outcome
So it is my view that the Converts are converting and selling down aggressively, to cash in on their profits garnered to date. It does not make sense to wait much longer, September 1st is right around the corner
In fact, just eyeballing the trading volumes for July, the Converts may already have exited much of their position, if not all of it already. Now, this is PURE speculation on my part, I have no hard evidence of this
But if I am correct, then we just had a MAJOR overhang removed. And the stock price is meaningfully lower than when I wrote up my article, at which point I thought the r/r was already incredible
Sum it up, I think this is an excellent opportunity and added a bunch more exposure to $JAKK at current levels. I am excited for earnings next week, honestly no idea on the specifics of the quarter, but I think more likely to be strong given flow thru of cost cuts implemented
Disclosure: long $JAKK. This is NOT investment advice, DYODD as always 😎
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