Eastman Kodak (KODK) has a long and storied history. For nearly 90 years, it was the dominant name in film and film processing. It was a "Nifty Fifty" stock, which was the momentum group that proceeded the current FATMAAN stocks.
In 1912 the company set up one of the first industrial research centers in Rochester, NY, and rolled out a steady supply of new inventions and large profits from its "razor and blade" business model. Eventually, it spun off its Eastman Chemical (EMN) division before competition, and digital photography forced it to reorganize.
The company has struggled in recent years trying to find a new focus, but it has swung from substantial losses to a profit and is sitting on $362 million in cash and only has a market cap of $506 million.
However, what is particularly interesting here is that there was a large amount of insider buying in March. Insiders bought over $15 million in shares on the open market at prices ranging from $5.73 to $6.42.
Kodak was briefly a "meme" stock that jumped big after former President Trump commented that they would receive funding for pharmaceutical production. It also made a brief foray into cryptocurrencies.
There was also was an insider trading investigation, and eventually, new management was put in place. New management has been working jointly with a number of companies to develop new businesses in various areas, including green energy.
The big question is why would these insiders suddenly decide to put so much cash on the line? Do they know something that might change the trajectory of the company? If we do a little digging, though, there is a hint that Kodak is on the brink of a major new enterprise.
Kodak has long provided "coatings." Coatings are used for many industrial purposes and in photography, but they have a special use for batteries where the coating is an important component of the battery itself and is not just cosmetic.
The company is working to develop energy storage devices such as lithium-ion batteries, fuel cells, and solar panels. There are several energy storage companies in the Eastman Business Park, such as Plug Power (PLUG) , that look to be a potential customers. Kodak has been advertising for a number of positions in this new division and is well on the way to developing a new facility for this purpose.
In its most recent 10-K, Kodak discusses that it plans to use its expertise in copper micro-wire technology and high-resolution printing to contract manufacture custom "transparent antennae" for automobiles and commercial construction equipment. These integrated antennas can be embedded into glass surfaces. Kodak is working with several customers, including General Motors (GM) , in this area.
The company is also involved in a number of other projects, and in addition to its large cash holdings, it also holds ownership of much of the Eastman Business Park, which is not reflected at fair value in the balance sheet due to its low-cost basis. In addition, Kodak has a substantially overfunded pension plan that could be monetarized at some point.
Like most value plays, Kodak needs a catalyst and investor attention. The insider buying combined with the balance sheet and the potential new business enterprises sounds extremely promising, and I will be watching for improvement in price action as I build a position and will have more details in the near future.
