Yahoo Finance Investors Who Bought Kadmon Holdings (NYSE:KDMN) Shares A Year Ago Are Now Up 90%
The simplest way to invest in stocks is to buy exchange traded funds. But investors can boost returns by picking market-beating companies to own shares in. For example, the Kadmon Holdings, Inc. (NYSE:KDMN) share price is up 90% in the last year, clearly besting the market return of around 27% (not including dividends). So that should have shareholders smiling. On the other hand, longer term shareholders have had a tougher run, with the stock falling 8.0% in three years.
See our latest analysis for Kadmon Holdings
Kadmon Holdings recorded just US$396,000 in revenue over the last twelve months, which isn't really enough for us to consider it to have a proven product. So it seems shareholders are too busy dreaming about the progress to come than dwelling on the current (lack of) revenue. It seems likely some shareholders believe that Kadmon Holdings has the funding to invent a new product before too long.
As a general rule, if a company doesn't have much revenue, and it loses money, then it is a high risk investment. There is usually a significant chance that they will need more money for business development, putting them at the mercy of capital markets. So the share price itself impacts the value of the shares (as it determines the cost of capital). While some companies like this go on to deliver on their plan, making good money for shareholders, many end in painful losses and eventual de-listing. Some Kadmon Holdings investors have already had a taste of the sweet taste stocks like this can leave in the mouth, as they gain popularity and attract speculative capital.
When it reported in September 2019 Kadmon Holdings had minimal cash in excess of all liabilities consider its expenditure: just US$47m to be specific. So if it hasn't remedied the situation already, it will almost certainly have to raise more capital soon. It's a testament to the popularity of the business plan that the share price gained 104% in the last year , despite the weak balance sheet. You can see in the image below, how Kadmon Holdings's cash levels have changed over time (click to see the values). You can see in the image below, how Kadmon Holdings's cash levels have changed over time (click to see the values).
It can be extremely risky to invest in a company that doesn't even have revenue. There's no way to know its value easily. One thing you can do is check if company insiders are buying shares. If they are buying a significant amount of shares, that's certainly a good thing. Luckily we are in a position to provide you with this free chart of insider buying (and selling).
A Different Perspective
Pleasingly, Kadmon Holdings's total shareholder return last year was 90%. What is absolutely clear is that is far preferable to the dismal 2.7% average annual loss suffered over the last three years. It could well be that the business has turned around -- or else regained the confidence of investors. You could get a better understanding of Kadmon Holdings's growth by checking out this more detailed historical graph of earnings, revenue and cash flow.
If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
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