Before Tuesday, professional investors hadn’t even heard of...

Before Tuesday, professional investors hadn’t even heard of wireless radio technology developer Etherstack. Its market capitalisation was $15.9 million. A grand total of 6.5 million of its shares had changed hands in the nearly eight years since it listed on the Australian Securities Exchange.iSignthis chief executive John Karantzis is a major shareholder in Etherstack. SuppliedOn Tuesday alone, 19.6 million Etherstack shares were traded. Its share price opened at 18¢ and closed at $1.75, up 872 per cent. Who said Australia doesn’t have Robinhood traders?This was all seemingly down to the company’s announcement half an hour before the market opened (and marked as “price sensitive”) that it had “entered a global teaming agreement with Samsung Electronics to deliver next generation Mission Critical Push To Talk (MCPTT) over LTE solutions to telecommunications carriers and governments across the globe.”Which sounded vaguely lucrative. Yet the announcement contained no reference to the revenue this partnership is expected to generate – a fairly dependable indicator that it won’t be generating any.Lending the whole performance a powerful sense of culmination was the bashful admission – almost an afterthought! – from chief executive David Deacon that “Etherstack has been quietly working with Samsung over the past 12 months…”But nearly three hours later (after a pause in trading imposed by the bourse), Etherstack released “additional information”, elaborating that it “derives revenues from this global agreement in the future when Samsung and Etherstack together supply technology to Samsung’s customers”. So theirs is an agreement to develop a product both parties hope they might then sell – when and if it exists. An outright non-event.The announcements – and the market’s ecstatic reaction to them – invited unhappy comparisons to GetSwift, which in November 2017 announced a “deal” with Amazon, had its shares frozen by the ASX on the basis the announcement was too vague, then saw its stock nearly double. Ten days later, GetSwift raised $75 million issuing new shares.In fairness to Etherstack, its announcement at least quotes a junior Samsung executive, Wonil Roh, and was also released on Samsung’s own website. The Federal Court heard two weeks ago that GetSwift announced its Amazon trial despite Amazon explicitly asking it not to.But does Etherstack now, with a heavy heart, turn to the market for fresh capital? Its balance at March 31? A mere US$474,000 ($687,000). Meanwhile, its share price closed at $1.04 on Wednesday, holding on to more than half of Tuesday's gains. So that would be a “yes” to the capital raising.The moral of the story here is that good things happen to good people. By happy accident, Etherstack’s “news” came on the final day of fiscal 2020, meaning its institutional investors will mark the performance of their shareholding in the company to that $1.75 closing price (it started FY20 at 22¢). We should say Etherstack’s institutional investor (singular), being LHC Capital – the extremely lively hedge fund of Marcus Hughes and Stephen Aboud. Nobody can ever accuse them of index hugging.In August, LHC paid $2 million for 6.7 million convertible notes (or 30¢ per unit). At June 30, they were worth $11.7 million. And on Tuesday, LHC converted half of them.This stunning turn will at least partially obscure the epic value destruction Hughes and Aboud caused their fund investors by allocating more than 20 per cent of LHC’s total assets to shadowy fintech iSignthis, which we now know became an international money-laundering colony. Its shares have been suspended from the ASX since October and, in protest, the company is now seeking to delist.Which perfectly explains how LHC ended up lending to this tadpole. Listed among Etherstack’s Top 20 shareholders is none other than iSignthis’ truly unique chief executive John Karantzis. Through one of his various entities in the British Virgin Islands, Karantzis controls 410,000 shares now worth $426,400.Deacon and Karantzis were classmates in electrical engineering at the University of Western Australia. Etherstack and iSignthis share a common non-executive director, in Scott Minehane. And iSignthis even loaned Etherstack $1 million in 2018.Etherstack’s is a most brazen exercise in calf-fattening on market day. Which makes Karantzis’ association so fitting – given the outlandish route he took to hit performance targets for 337 million new iSignthis shares in the first half of 2018.As we said, good things happen to good people. Now for that capital raising…