The problem with investing in Jaguar Health (NASDAQ:JAGX) right now is that no one outside of the company knows exactly how much cash Jaguar has. Management has not shared a balance sheet in a while. Consequently, it is impossible to tell what JAGX stock is worth.
The company raised $15 million at $3.38 per share from a large family office in mid January, receiving just $13.8 million after expenses, according to an SEC filing.
Meanwhile, the share price lost almost 16% in the days following that Jan. 13 capital raise. By the end of the month, JAGX stock was down to $2.82 per share. It entered February with a pro forma market capitalization of $230 million.
Beyond that family office private placement, on Jan. 12 the company entered into a very complicated secured debt agreement for $6 million. The promissory note is concerning as it has collateral on virtually all of the company’s productive assets and patents.
JAGX Stock Roiled By Financings
This seems to me this is a pretty lopsided agreement for a company that just raised $15 million in equity. Why couldn’t Jaguar have sought more money in equity rather than enter into such a stringent debt agreement? Something is very strange here, especially since we have no visibility into the company’s balance sheet.
Moreover, prior to those transactions, the company exchanged preferred stock for common stock during Q4 with one of its shareholders. I still can’t figure what money the company received as a result of this or what benefit there was to Jaguar.
Now comes news that the company is involved in a complicated non-U.S. SPAC deal for Jaguar’s Napo EU subsidiary to come public. Post Pandemic Recovery, a special purpose acquisition company from Swiss Growth Forum, is the SPAC in question. The shares will ultimately trade on the AIM Italia exchange.
Are you kidding? There is no benefit to having a subsidiary listed on an obscure stock exchange across the world. If the company needs money, for some reason, it should just sell more shares on NASDAQ.
All of this shows signs of a company in financial disarray. There seems to be no rhyme or reason about what they are doing to raise money, how much they need or when it is needed.
And that’s not all. Apparently, Robinhood has put this small little stock on a list of 50 securities that are restricted by the brokerage firm. That is not a good sign. The stock was already fairly illiquid, to begin with. Now the company is going to have a very difficult time raising further equity from Wall Street.
What To Do With JAGX Stock
I am sure that the company’s products might be worth funding. Or are they? There is so much confusion about the company’s financial maneuvers that it brings some doubt as to the management of the company itself.
I suspect that most astute investors are going to stay away from JAGX stock until one of two things has happened. Investors should wait for either of these two events:
- JAGX stock is much cheaper on a statistical basis (i.e., where you can read their financial statements and determine what the company is worth), or
- Something quite clear has happened that brings to light its obvious worth and valuation (e.g., such as an authorization by the FDA about its prophylaxis for the symptomatic relief of inflammatory diarrhea in the “long-hauler” COVID-19 recovery patient population.)
At least in the latter event, the investor can decide whether the stock is still a value bargain. That would be instead of speculating on how much cash Jaguar Health has now and if it can last through related trials.
On the date of publication, Mark R. Hake did not hold a long or short position (either directly or indirectly) in any of the stocks in this article.
Mark Hake writes about personal finance on mrhake.medium.com and runs the Total Yield Value Guide which you can review here.