SCHEDULE: Hexstone Capital Discloses 9.3% Stake in LM Funding

Hexstone Capital LLC and Brendan O'Neil have reported a 9.3% beneficial ownership stake in LM Funding America, Inc., totaling 1,410,790 shares.

Summary

• Hexstone Capital LLC and its managing member, Brendan O'Neil, jointly reported beneficial ownership of 1,410,790 shares of LM Funding America, Inc. common stock.
• This represents a 9.3% stake in the company, calculated based on 15,198,388 shares outstanding after LM Funding's recent offering.
• The reported beneficial ownership explicitly excludes an additional 1,410,790 shares issuable upon the exercise of warrants held by Hexstone Capital.
• The exercise of these warrants is contingent upon obtaining stockholder approval, which has not yet been secured.
• The acquisition of these shares and warrants occurred contemporaneously with LM Funding's recent public offering and a private placement.

Sentiment

Score: 7

Explanation: The filing indicates a significant new investor taking a substantial stake, which is generally positive. However, the contingency of stockholder approval for warrant exercise introduces a minor element of uncertainty.

Positives

• A significant institutional investor, Hexstone Capital LLC, has taken a substantial 9.3% stake in LM Funding America, Inc., indicating potential confidence in the company's value.
• The investment includes warrants for an additional 1,410,790 shares, suggesting a long-term interest and potential for increased ownership if stockholder approval is obtained.

Risks

• The exercise of 1,410,790 common stock purchase warrants held by Hexstone Capital LLC is subject to the approval of LM Funding America, Inc. stockholders, which has not yet been obtained.

Future Outlook

The filing indicates a potential for Hexstone Capital LLC to increase its stake in LM Funding America, Inc. by an additional 1,410,790 shares, contingent upon future stockholder approval for warrant exercise.

Management Comments

• The filing includes a certification from the reporting persons stating that the securities were not acquired to change or influence control of the issuer, nor in connection with any transaction having that purpose or effect, other than activities solely related to a nomination under Rule 14a-11.

Industry Context

This Schedule 13G filing reflects a common practice where institutional investors disclose significant passive stakes in publicly traded companies. Such disclosures often follow public offerings or private placements, providing transparency on new major shareholders. For LM Funding America, Inc., this indicates a new significant investor following its recent offering, which can be viewed positively by the market as a vote of confidence.

Comparison to Industry Standards

• As a Schedule 13G filing, this document primarily serves as a regulatory disclosure of beneficial ownership and does not contain performance metrics for direct comparison to industry standards. However, the acquisition of a 9.3% stake by Hexstone Capital LLC, a private investment firm, is consistent with typical institutional investment strategies in small-cap companies following capital raises. For example, similar filings are often seen from firms like Vanguard or BlackRock when they cross the 5% threshold in various companies, though their investment mandates are typically broader. The specific details of the private placement and warrants would be necessary for a more granular comparison to similar financing structures in the industry.

Stakeholder Impact

• Shareholders: The entry of a new significant investor could be viewed positively, potentially increasing confidence. The need for stockholder approval for warrant exercise means existing shareholders will have a say in the full realization of Hexstone's stake.
• Company Management: The company has secured a significant investor through its recent offering and private placement.

Next Steps

• LM Funding America, Inc. will need to seek stockholder approval for the exercise of the 1,410,790 common stock purchase warrants held by Hexstone Capital LLC.

Key Dates

Recommendation

The filing reveals a new significant investor, Hexstone Capital LLC, taking a 9.3% stake in LM Funding America, Inc., which is generally a positive signal. However, the full extent of this investment, specifically the exercise of an additional 1.4 million warrants, is contingent on stockholder approval. While the initial investment is a vote of confidence, the uncertainty surrounding the warrant exercise and the passive nature of the 13G filing (no intent to influence control) suggest a 'hold' position. Investors should monitor the outcome of the stockholder vote and any further strategic moves by Hexstone Capital.

Keywords

LM Funding America, Hexstone Capital, Brendan O'Neil, Schedule 13G, Beneficial Ownership, Common Stock, Warrants, Private Placement, Stockholder Approval, SEC Filing