Each 2018 quarter, Orchids Paper (TIS) has had a consecutively worse financial performance.
For the past two quarters, Orchids’ gross margin has been almost 0%, while its SG&A and interest expense have ballooned to unsustainable levels.
We believe the banks won’t extend Orchids deadline for a sale of its assets, and it will file for Ch 11 bankruptcy by the end of the year.
TIS recently rose over 100% on insignificant news, which we believe creates a good short opportunity.
Next quarter, marketing for new customers will be even harder for Orchids as competing ultra-premium tissue manufacturing facilities will begin production.
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