No reasonable individual would claim that life has been easy for investors in Kodak (NYSE:KODK). Over the years, Kodak stock holders have been put through the ringer, not just once but on multiple occasions.
Check the popular financial message boards and you’ll likely see an impassioned debate over the future of Kodak. This is a company that has had to reinvent itself in a dramatic fashion. And because of this adaptation, not everyone is on board with the Kodak of 2020.
Will there be a “Kodak moment” for investors who have ridden the stock’s proverbial roller coaster? Don’t count on the price action calming down anytime soon, as it is a big mover.
But if you can handle the volatility, the rewards could outweigh the risks. At the very least, we know for sure that there is a large-scale investor with a sizable stake in the company. Is that a bullish sign? Let’s examine the facts so you can decide for yourself.
Kodak Stock at a Glance
Half a dozen years ago, it might have seemed inconceivable that Kodak stock would eventually be classified as a penny stock — defined by the U.S. Securities and Exchange Commission (SEC) as a stock that trades under $5 per share.
Unfortunately for long-term shareholders, the company has reached penny stock status on more than one occasion over the years. However, the share price showed promise when it lifted above $5 in late July.
There was a massive spike above $30, but that did not last long. The pop was followed by a significant drop back toward the $5 level.
Thankfully, though, that pop did allow Kodak to skirt the penny stock label. This price action seems to indicate that the bulls might be able to regain control. On Oct. 9, the share price surged nearly 13% and closed at $10.01. As of today, Kodak stock is being valued around the $10 mark.
But that’s also just another day for the company. The volatility of this stock is typical, so always proceed with caution.
July Buzz and Potential Scandal
In July, there was much buzz over Kodak’s pivot from a camera and film manufacturer to a potential ingredient maker for generic drugs meant to treat the novel coronavirus and other medical conditions.
More specifically, Kodak won a $765 million government loan for this purpose, through “funding provided under the Defense Production Act.”
This explains why Kodak stock skyrocketed over the summer. Yet, there was also a potential problem: a special government committee soon hired law firm Akin Gump Strauss Hauer & Feld to look into the possibility that the company had engaged in insider trading prior to the loan announcement.
And indeed, it did seem unusual that CEO Jim Continenza and other Kodak executives received stock options on the day before that game-changing loan was announced.
Dodging a Bullet
Despite the drama, though, Kodak managed to avoid complete disaster in September when the law firm found that it didn’t violate any laws. When that was announced, shares jumped 80% at one point.
These events could be viewed as the start of something big for the company — a relief rally. Of course, Kodak’s troubles are not completely in the rear-view mirror. But it appears that a major shareholder concern has just been quelled.
Perhaps, there was also a contributing factor in Southeastern Asset Management’s decision to load up on Kodak stock shares. According to a U.S. SEC Schedule 13G filing reprinted by Kodak, Southeastern Asset Management now holds 14,029,093 shares.
That represents an impressive 15.8% stake in the company. It’s probably the reason why the stock jumped nearly 13% in one day, and definitely a big vote of confidence in the company’s future.
I’m not saying that you should buy into Kodak simply because Southeastern Asset Management owns it. Instead, I’m inviting you to see it as a story of reinvention and turnaround — a company to keep your eye on.
If you can buy into that — if you can handle the volatility — then you might be a prime candidate to own Kodak stock now.
On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.
Louis Navellier had an unconventional start, as a grad student who accidentally built a market-beating stock system —with returns rivaling even Warren Buffett. In his latest feat, Louis discovered the “Master Key” to profiting from the biggest tech revolution of this (or any) generation.