What the heck was that? The Q4 results are a total joke. Mgt is hiding behind A-10 to create some fuzz. This company is a mess, management must go. I can't wait to hear the dance tomorrow morning at the conference call. This stock price will go to single digits soon- who is stupid enough to own this stock? Certainly not management - they just create confusion, and make silly charts that say everything is beautiful and wait until next quarter again.
Sentiment: Strong Sell
CPI Aero Inc., Edgewood, New York, has been awarded a $49,000,000 indefinite-delivery/ indefinite-quantity contract for T-38C Pacer Classic III aircraft modification kits. Contractor will provide 74 aircraft kits used for structural modifications to sustain the T-38C Aircraft. Work will be performed at Edgewood, New York, and is expected to be complete by Feb. 23, 2021. This award is the result of a competitive acquisition with four offers received. Fiscal year 2014 aircraft procurement funds in the amount of $5,642,202 are being obligated at the time of award. Air Force Life Cycle Management Center, Hill Air Force Base, Utah, is the contracting activity (FA8211-15-D-0001).
Shun: Transitive verb. to avoid.
After the in over his head CEO spoke at the investor's conference and bored them with overly voluminous and repetitive childlike slides, the investment community continued to shun this stock. Much like it has been shunned for the past 5 years during a roaring record setting Bull Market
Sentiment: Strong Sell
I have taken this time to review the successful companies that I have invested in and the ownership of shares by insiders is a non factor. As a matter of fact, when the insiders and the EPS are aligned through stock options, the overwhelming majority out performed the overall market. CPI has an incredibly good reputation for turning out a quality product and this bodes well in obtaining additional contracts. Yes, management must continue to perform and yes the sales people and senior management must execute. So far it looks like they are, which will be backed up when new orders are announced. I have no inside information, just some nice comments from some current customers.
Really? It doesn't bother you that you may own more shares of a company's stock that its CEO does? And I'm not picking on you. It's a philosophical question. I personally think board members should get themselves invested when they join as a sign that that they're not there to collect a paycheck, but actually believe in the company, and that they can make a difference. I, like you, I have no problem with stock options when used correctly. The incentive is that if the price doesn't go up, you basically get nothing.
But shouldn't the officers own a piece of the company? Shouldn't they be more tied into the stock price success than you and I? The former CEO owned something north of 150,000 shares. Shouldn't the current one own more than 7,000? And to your point, if he truly believed in the company's potential success, and was willing to put his money where his mouth is, couldn't he institute a stock buying plan that completely eliminates the Sarbanes Oxley complications?
To your 80% ownership point, don't confuse insiders and institutions. The only insider in that group is the chairman, who dumped shares in 2012. The institutions all bought in along the way. I wonder if we were able to ask them, what they would think about management ownership. While I don't knock your philosophy on it, I think you're probably in the minority when it comes to that position. But that's what makes the world go round!
One last question. "Certainly undervalued." Is it your opinion that this company, turning out non-proprietary (to them anyway) parts for planes, and hasn't grown (and basically won't again for '15) its bottom line deserves a 15 to 20 multiple? If so, could you tell me why you think that?
Thanks for your insights.
Curious Investor, For better or worse, I disagree with officers and/or directors purchasing shares on the open market. With Sarbannes Okley and regulation FD, there are extreme regulations on insiders when they buy and sell shares. Additionally they are compensated with stock options as an incentive package. If the stock does not appreciate above the issue price of the option, the officer/director does not receive compensation for those shares. They are certainly incentivized to make the stock only go up. In addition, almost 80% of CPI float is owned by Insiders and Institutions. The quality of the work by CPI has certainly been exceptional and they seem to have a good, if not great reputation for putting out finished product. At .80 to 1.00 in profits, CPI is certainly undervalued. If the company continues its diversification of customers (ie: Embraer) this company should show nothing but growth and larger EPS.
My REAL concerns are two-fold. The first is the one Boolean has harped on, and that is, no management or board stock buying. The longer this goes, the worse it feels. How can a CEO not own a share of stock that he purchased himself? He needs to buy 10,000 shares or more to show us his own confidence. Otherwise, why should we believe there's something to be confident in? How about the board? I've scoured the Form 4s and I've NEVER found a purchase by ANY member of the board, other than the exercise of options? Unheard of for a company that wants us to believe its story. Why should we, if you seemingly don't?
The second concern is that they still haven't filled the management gap left when the previous CEO left. It doesn't look right at all that what is supposed to be a $100 million company has a person with the titles of CEO, COO and President. That would be ok if it was interim, but 10 months in isn't interim anymore. It strikes me as penny-pinching, which also isn't a good sign if we're to believe there are good things coming.
I'm pretty leery about investing here, but like I said, at the right price, history says this is a good buy even with all my hesitation. I'd welcome thoughts from others. Am I being too concerned about these things? Do others agree that there are some bad signs here? And if so, which bathers you the most? Is this company ripe for acquisition, and we could get a premium just based on that? Does anyone know if there are any rumblings about that in the industry?
I look forward to some good dialogue.
What should we expect? Here's my take on it, complied from my own views, but also from what others have said on this board. I'd appreciate some feedback, as I will always listen to intelligent points of view.
I'm not pleased that the institutional market has not supported the new CEO. Meaning, the stock is down almost $4 from when the management change occurred, and there hasn't been a showing of support for the new CEO, by bringing the price back. Is it a lack of confidence, or a wait and see more attitude?
As far as that goes, I think it does lend itself to other opinions expressed here that even the two late year news items, the E-2 and the F-16, didn't excite the big investors. While the stock had immediate jumps when announced, it has settled back down again. Is that because as has been stated here, the E-2 really wasn't anything new, and the F-16 is IDIQ, so it may be worth only pennies on a dollar of its potential value?
Given their guidance, and the items just mentioned, I'm thinking this should be a $9.00 stock until, or unless, something truly exciting happens. $7 - $8 million in net income yields that kind of valuation in my opinion. I will say that down at that level, or in the $8.00 range, which could happen, I would buy back in very quickly. Because whether this stock deserves its pricing at times, historical charts show that it always bounces back from that point and so there is money to be made. It may not be for a rational reason, but that really doesn't matter.
I guess barcytom went away for the holidays. And while I'm not bullish on the company right now, I do agree that people deciding management itself isn't any good is an arbitrary assessment in most cases. You are correct in that if you're not a management or industry expert, can you judge whether a manager is doing a good job with the company? If you've never run a company, can you truly judge the performance of another?
Yes, we can have our opinions, thoughts, feelings and the like. But do we know what it's like to be in the trenches? Do we know what is happening behind the scenes of any company? Is the difference between what barcy calls good or bad management the award of a single major contract? It could be, with his criteria. That's why even when I don't think a company is necessarily good, I try not to blame the management, as we don't know what the board has directed, nor what is going on that we don't get to see.