FS Restatement points to pervasive underlying issues
As a long term holder of PWE and a CPA this is horrific news.
I have stayed long with PWE up until today. The discount to B/V and liquidity value has provided the investor with a seemingly incredible opportunity. This is not just simply an "accounting issue." An executive team does not cook the books unless there is some major issue with the company. Why would a strong company take this risk or even a company that is just having some management issues? Companies only cook the books in order to avoid some kind of a compounding loss, potentially having to pay a debt that will come due if they miss their numbers which will cause a sequence compounding issues.
This is not a take out target any time soon because no company would ever invest in a company that they have no idea what their numbers actually are. In my opinion there are only 2 outcomes from here, a continued sell off because there is going to be no positive news regarding this company anytime soon... for example "Actually we made a mistake, there is no accounting issue and we are doing great financially," and in all likelihood an organized bankruptcy.
I have sold all of my shares as of today and put the proceeds to work buying puts with an expiration date of 1/17/15.
Your analysis is exactly right. Something major is wrong here and the long's are in denial. This is headed to zero.. Watch all their credit facilities get pulled here soon. They will have no cash to operate and will be forced to liquidate all their assets. It's only a matter of time. I'm completely short -all in so to speak. I am not only short but I jumped on some put options that were still selling for dirt cheap. I'll be a rich man and all the longs will just continue saying it's nothing major.
@davidbogdanoff - That is interesting, I worked for EY as an auditor and then in TAS for 5 years. I now work in valuations for a PE firm... from my professional experience I simply can not see a positive outcome from this... Could you please give me some examples of publicly traded companies that have emerged in a positive manner from restating their FS for the prior 4 years due to intentional misrepresentation of Financials? (Please note this is not a sarcastic jab, I really am curious if there are any... I would love to research them and how they were able to recover)
I hate options for compensation. I much prefer they pay larger salaries. Options make people do unethical things like backdating and manipulating quarterly results. Not saying that happened in this case.