Shorters Abandon Intertainment Media

The heaviest traded stock on the TSX Venture Exchange this year, Intertainment Media (TSXV:INT), is also likely to be one of its top performers.

On the last day of 2010, shares of the Toronto based company could be had for just a dime. On the back of Ortsbo, the company’s software that translates, in real time, more than fifty different languages across a dozen social media platforms, the company’s stock rose as high as $2.25 in April before settling back to Friday’s close of $.485.

As its chart suggests, Intertainment has enlisted its share of believers and its share of doubters in an event filled seven-plus months. Back on April 29th, The Globe and Mail’s David Milstead wrote an article that Intertainment Media management believed “suggested that the Company and its management are providing misleading and inaccurate data concerning visitors to Ortsbo’s websites.”

Following the Globe article, Intertainment released what it said was “verified and validated Google Analytical information concerning the number of users of its Ortsbo platform” and threatened to “pursue legal means to defend the legal rights of the Company and its shareholders”.

The Globe and Mail, subsequently, changed the piece saying that “An earlier online version of this column on Intertainment Media did not intend to suggest that the company is misleading the public or its investors about the growth of its product, Ortsbo.com, or that the Google Analytics data on the number of unique visitors to Ortsbo.com are inaccurate. The Globe and Mail regrets any inconvenience that may have been caused to Intertainment Media.”

The pitched battle between Intertainment bulls and bears, however, was just beginning. On May 2nd, just after the article was released the short-interest, those betting that the price of the company share’s would fall, rose to 5.37 million shares. On that day, the price of the stock was $1.39, already down from the company’s April high of $2.25.

While some on Bay Street may have hated Intertainment at $2, there is much less conviction to the negative sentiment now that the stock has pulled back. On August 2nd, when shares of the company closed at $.58 as just over four million shares changed hands, short interest on Intertainment Media was less than a quarter its pre-summer number, at just 1.22 million shares.

Late last month, Intertainment released numbers on Ortsbo’s first year performance. The numbers showed more than 71 million unique users from over 170 countries and territories had used the product.

While few holding short positions may be left to critique Intertainment’s figures, others may be gone for another number that will not be doubted; 23.7. That’s the number of millions of dollars Intertainment raised in a recent financing, bringing its cash position to just under $26 million. While that figure may have seemed a drop in the bucket compared to its once titanic market cap, the cash now represents approximately 20% of the company’s overall value.