Friday, April 16, 2021

Review of Ault Global's 2021 Investor Call

If I didn't know any better, I'd guess Ault Global Holdings (DPW) was a money laundering operation hiding in plain sight. With a portfolio of businesses tied partly to Bitcoin mining; the military industrial complex; and assets in the United Kingdom, USA, and Israel, the set-up appears ripe for accounting shenanigans. 

On an April 15, 2021 investor call, executives sounded upbeat and aboveboard, focusing on the company's strong balance sheet and Bitcoin mining operations. At one point, a speaker compared Ault Global to Riot Blockchain (RIOT), indicating Ault's aspirations. Though Ault had issues when it first began mining Bitcoin, it has since bought a datacenter space where it owns a 17,000 square foot facility on 34.5 acres. Ault is not selling Bitcoin mined in Michigan, a different strategy than its Indiana operations. (No explanation was given for the different approaches.) In addition to the businesses already mentioned, Ault is also involved in electric vehicle chargers and New Zealand's Naked Brands Group Ltd.  (Interestingly, NAKD also touts its financial strength: "Naked currently is in a very strong financial position due to capital raised from shareholders in readiness to deploy its new strategy of developing a world class e-commerce lingerie and intimates retail platform.") 

During the Q&A session, the company provided mostly generalities. For example, it would not comment on EV charger sales or its pipeline. It did not answer a question regarding how its EV chargers differed from competitors. It had no comment on questions relating to its NAKD investment, saying it was a "passive investor." 

As a value investor, I know Amazon and Bezos changed everything by showing profits matter less than attaining a dominant technological standard. It appears the Bitcoin, Coinbase (COIN), and blockchain aficionados believe they are on the verge of attaining a new dominant technological standard. I have my doubts. Then again, as a value investor, I have been on the outside looking in for at least a decade. 

© Matthew Rafat (April 2021) 

Disclosure: I own insignificant amounts of DPW and NAKD but my positions may change at any time. 

Update, June 2021: from Ault's "definitive proxy statement," page 8: 

"Coolisys' innovative charging solution can produce a full charge for an EV with a 150-mile range battery in just 30 minutes... Coolisys EVSE series can charge virtually any type of electrical vehicles..." 

From page 63: "On December 31, 2020, we had cash and cash equivalents of $18,679,848." 

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