Daily Journal Corporation reported its fiscal Q2 results yesterday, and the headline EPS swing tells the whole story: a loss of $25.14 per share versus earnings of $32.43 a year ago — a reversal entirely explained by the company's mark-to-market investment portfolio rather than its operating business.
Revenue is the cleaner signal of underlying momentum. Sales rose 25% year-on-year to $22.7 million, up from $18.2 million in the prior-year quarter. That follows a similarly strong Q1, when revenue climbed to $19.5 million from $17.7 million. The Journal Technologies software business — the growth engine behind the headline — continues to expand its court technology contracts, and the top-line trajectory is clear. The net loss of $34.6 million, against a $44.7 million profit a year ago, reflects the volatile mark-to-market treatment of DJCO's large equity holdings, not operational deterioration.
Short interest heading into the print was 13.4% of the free float — a meaningful level, though short sellers had been pulling back. Shares short fell roughly 6.5% over the prior week to around 174,000. Borrow conditions remain easy: availability runs at 125% of short interest, meaning there is more stock available to lend than there are current shorts, and cost to borrow is just 0.71% annually. The ORTEX short score of 64.5 reflects moderate but not extreme bearish conviction, sitting well below the 90-plus readings that typically mark genuine squeeze setups.
The RSI of 35 signals the stock is approaching oversold territory after a difficult month — down roughly 5.4% over the prior 30 days and off 3.7% on the week heading into the report. The May 18 event on the calendar is a shareholder meeting rather than a fresh financial release. What that gathering will test is whether management's long-term investment posture — the Munger-era philosophy of concentrated equity holdings — retains the confidence of a shareholder base increasingly watching mark-to-market losses dominate the income statement, even as the core software business quietly compounds.
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