Shareholder Alerts Could Derail KODK After D.E. Shaw News

Credit: Pikist

Eastman Kodak Company shares surged after news emerged that hedge fund D.E. Shaw took a 5.2-percent stake. Yet, positivity around KODK could be short-lived as shareholder alerts continue to emerge.

  • August 31, 2020: An SEC (Securities and Exchange Commission) filing revealed that D.E. Shaw (hedge fund) had attained a 5.2-percent stake in Eastman Kodak Company (KODK).
  • September 1, 2020: By the time markets opened, KODK had moved from $5.98 to $9.50 (after-hours and pre-market trading). By the closing bell on September 1, KODK was $7.30.
  • Several shareholder alerts have hit the news about the company, after alleged insider-trading surrounding disclosure of a $725-million government loan.

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Shareholder Alert

  • Complaint #1: In July, the Eastman Kodak Company was awarded a $765-million Defense Production Act loan for the manufacturing of COVID-19 pharmaceuticals. However, the loan was put on hold after the SEC began investigating the company for improper disclosure.
  • Complaint #2: It has been alleged that prior to the loan disclosure, defendants distributed millions of dollars’ worth of stock options and purchased tens of thousands of company shares knowing that KODK value would rise.
  • Defendants: Eastman Kodak Company Executive Chairman, James Continenza, and several others within the company hierarchy.

The government loan remains on hold while these allegations are investigated.

Existing shareholder alerts include:

It looks like 2020 could be a very interesting year for the Eastman Kodak Company (KODK). Definitely a stock worth watching over the coming months.

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Hedge Firm D.E. Shaw

  • D.E. Shaw is a powerful firm in the global financial market. Watching over $50-billion worth of assets.
  • David E. Shaw is the president and sole shareholder of D.E. Shaw & Co.
  • D.E. Shaw acquired 3.9-million KODK shares. Towards $30-million in value.
  • According to the firm, the stake in the Eastman Kodak Company is passive.
  • D.E. Shaw invests using quantitative and qualitative strategies. Meaning, they find value where others might see risk. This means when they act, investors often pay attention.

At this point there is no guarantee the government loan will be issued even if the Eastman Kodak Company is proven innocent. Because of this, KODK remains a risky investment.

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