...and you should too! Insideradio.com ($)
This is just an excerpt; story in today's issue...
Cumulus’ bid for Citadel lifts the stock price of … Emmis. Cumulus Media hasn’t gotten far on its quest to merge with Citadel Broadcasting so far, having been rebuffed twice despite significantly raising its offer. Wall Streeters are already thinking Cumulus CEO Lew Dickey may have another partner that could be easier to convince if the Citadel deal doesn’t happen. That thinking has Emmis shares soaring 50% this week. “Lew is going to buy something, and some people believe Emmis would be his next target,” a Wall Street player explains. But it is more of a Christmas wish than reality. Both companies declined to comment, but multiple sources tell Inside Radio no discussions about a merger between Cumulus and Emmis have taken place. Although Emmis CEO Jeff Smulyan has tried to take his company private and has been open about considering selling stations in New York and Chicago, there’s been no indication he’d be willing to segue out of a leadership role. What has some Wall Street types doubting whether Citadel’s board will go along with a Cumulus buyout centers on...
Thanks very much for your very insightful post. After buying a fairly large block of EMMS at 64 cents and having it go down almost immediately to around 50 cents, I was somewhat gun-shy to even buy at 45 cents, thinking it might go down some more. Unfortunately it didn't and I missed out on around $34,000 at the current price had I bought at 45 cents. This time last year, I actually missed-out on an additional 500,000 shares of Citadel when it got down to $.015 cents while waiting for my one-cent bid to go through, which it never did. Since I sold at an average of 35 cents, that was the most expensive "penny-pinching" I've ever done.
I did some quick research on APP last night and was somewhat put-off by their most recent quarterly results, for which virtually everything was down. I was definitely put-off by their "obsession" with political causes, such as pushing to have the Dream Act passed. After all, they are "for-profit" and not a 501 C3. However, based on your comments today, I will certainly take another look.
My main question regarding Emmis is: are we missing something? After all, Smulyan tried to buy the company for $2.40 several months ago (not to mention his previous offer of $15.25 four years ago), and a number of shareholders thought that $2.40 was too LOW. I just cannot believe that more people are not buying at these levels.
Thanks again for your very knowledgeable posts, and sharing your market experiences and words of wisdom.
Yes, hindsight can play horrific tricks on your mind. One mistake I made last summer is when I landed in a great spot and knew I pretty much caught the lows of a few things, I just couldn't stay put long enough because so many other sectors were starting to blast off.
When you know you got the money in near the lows sometimes you just need to get out of your own way. Time will take you to the top.
You also have to remember that nobody really buys at the bottom tick, so 100 percent of the time you can expect to be down at some point on every investment you make. It is just a question of how much. It is almost a guarantee to be down at lest 20 percent on something if you are trying to buy something that has plunged.
Imagine buying 100K worth of Ford at $3, only to see it go to $1. Now it is $17, but that pain from $3 to $1 is real.
Imagine buying DAN at $1.50, only to see it go to 28 cents......now $17. Imagine buying CROCS at $5, only to see it go below $1....now over $18.
That is why the best time to buy is when something gets close to zero and there is a real business there. When EMMS hit the .40's recently, you were getting real close to can't lose land.
I mean, they had a deal unravel for over $2 this year. The CEO owns a bunch of shares. They have been in business for decades. 45 cents was almost back to the all-time lows of the sector last summer, when many of those companies similar to EMMS made major major moves up.
I fortunate enough to be watching it since last year so I got in. Now, I am not going to make the previous mistake of selling if it just hangs around here for a month. I know it is going over $1 relatively soon, so I likely won't sell unless you get some sort of manic quick runup.
I wouldn't mind a nice 10 cents per month increase for the next 12 months. That puts EMMS at $2 per share, and when you look at it like that it certainly seems probable.
There are so many other companies I missed, but I caught some good ones, too.
The bottom line is that there will always be great opportunities to make 10-15 times your money in 18 months or so. I am usually a few months early.
I have liked APP since August when it went under 80 cents. I got mine just over $1. At $1.65 now, but it had spiked a bit back then a few times, so even though I am up good, the big move has not happened yet.
The move to between $2.50 and $3 is shortly coming on that, and then I can see a quarter or two of year over year improvements......then I am looking for $5 in August.
At a minimum, I will look for $4 for APP by the end of 2011, and $2 for EMMS. These should both happen without much of a problem.
APP is somewhat similar to CROX, in that you have a lot of negative press near the lows, and a bit of controversial management.
If you look at the news articles from CROX when they were under the gun, you will see the same type of journey that APP is on.
APP is almost a cinch to double within 6 months. Look at all of the insider ownership, mainly the CEO, but also the main lender has warrants for 14 million shares at $2. The new President they brough in even got an option for one million shares at 1.75 per share.
There are only 70-75 million shares outstanding, not counting the warrants and options, and the CEO has over 40 million of them and has bought 3 million shares in the last two months.
I am just waiting for it to go up, like I know it will
I could kick myself (and scream also) for missing out on those too, although I wasn't previously aware of the extent of their meteoric increases. Unbelievable. What's even more distressing is that those monumental gains and similar huge run-ups are attributable to the 2008 financial meltdown, meaning that most of the low-hanging fruit is just a missed opportunity. While I was fortunate to buy Entercom at 75 cents, at the time I didn't have the funds to buy the 100,000 shares that I was ready and willing but not able to purchase. That, in my opinion, was the all-time no-brainer, given the fact that the entire company was valued at $30 million as I recall, when their old-line AM station in New Orleans (WWL) was worth about three times that amount. Fortunately, there still seem to be a few of those historic buying opportunities brought-upon by the 2008 melt-down, but there are significantly fewer stocks "still in the starting gate" that have yet to rebound like the ones you mentioned.
Regarding "the goal is to buy at such a low price...", that is my first rule of investing: Where does the stock stand in relation to it's five year high. I only invest in distressed stocks...the lower the price the better. Buy low sell high. (where have I heard that before?). Second criteria: cash flow. Third criteria: the stock's 12-month target price. I really should patent this approach, as it has proven extremely successful for my model portfolio, although I currently only invest in radio stocks.
Thanks very much. I will definitely research APP, KIDE, and IFON (I'm already heavily-invested in EMMS, of course). I'm very leery of bank stocks, however, due to the FDIC's ability to put them out of business overnight.
EMMS is a great buy because they would not sell the whole company for less than the current market cap. They also have stron insider ownership, mainly with the CEO, and when buyouts fall-through like the one with EMMS did, you would be shocked at how low a companies share price can go, especially with small-caps.
Even Yahoo, when they turned down Microsoft a few years ago, had their shares drop from 30's to $8. With small-caps like EMMS, you just saw what can happen as people throw in the towel after a buyout falls through.
APP American Apparel. I like this company a lot. The CEO has over 50 percent of the shares and within the last month has bought a few million dollars worth. Their main debt holder has warrants for 14 million shares, so everyone is on board to right the ship so everyone can cash in. There is nobody who has incentive to blow the company up, because the value is going to come from showing better operating results and getting a higher share price next year and beyond.
Plus, with APP, there were false bankrutpcy rumors all summer. I read ever article and you would be surprised how many misleading statements I found. APP has just about cleaned up most every major issue during the last 6 months. They are ready to roll.
KIDE This has almost as much cash as the market cap, and zero debt. What they also have, that most people don't realize is about 20 million worth of Auction Rate Securities that they are not listing as cash on the balance sheet. It is listed for a lot less than that, as well. Whatever those securities are worth, when you add that to the cash balance, you really cannot lose with it.
Spec/Gambling play is CBC. This company is unique in that it is a bank holding company, so it really won't be seized. One of its many banks could be seized, though. It is not an investment play, it is a spec play. Over 20 percent short, too.
I also like CRBC as a bit of an investment play. They are also a bank, and they are well capitalized, so the only risk is if the CEO dilutes the shares. That happened last summer, and I really don't see it happening again.
I also like IFON, which I think I might have noticed in a post by LongTimeFollower last year (KIDE from him, too). IFON has more cash than their market cap and zero debt. They are in a bit of a transition, but short of fraud, you don't have a chance of waking up to a wipeout.
Those are the ones I like off the top of my head.
Current prices so we can check back in 6 months.
I am looking for strong insider ownership and/or strong balance sheets. I am also looking for turning points, even if it is just exhaustion on the part of long-time holders. Capitulation, if you will.
Al of my good picks have been so obvious in hindsight. Most of my mistakes have been after an initial strong move up. An example is buying a stock at $1.50, and having it go to $2.50 within 30 days. Now, what I have sometimes done is grown impatient when it consolidates at $2.50. That may take many months, and it might even pull back a bit.
What I have taught myself is to change my thinking a bit. When I won shares in a company that I know is worth more to a potential buyer of the whole company, or if I own shares in a company that is in a key turning point where it has bottomed out and rebounded from the lows, I am teaching myself that instead of banging my head off the wall wondering why others can't see the value, I need to just sit back and understand that this is the exact situaton you want to be in, so it shouldn't be frustrating at all.
The only way possible is have investment success is to buy at a price that is lower than future investors will be willing to pay, so the goal is to buy at such a low price that you wonder how on earth the price got so low.
If you can find some good reasons why the price is so low, and you can get a grip on the particular journey of a specific company, then you are ready to buy low.
I concur with the insideradio articles take on this. Obviously, Jeff Smulyan is not going to sell the company to some one else, CMLS, or whoever. Now he MIGHT sell one or a few radio stations to CMLS, but that would be it.
Let's face it, the stock was way oversold at 50 cents, considering the rally in the rest of the business, CMLS' bid for Citadel, continued improvements in industry revenues, Smulyan's public statements that they are going to sell a few big city stations and pay down debt dramatically, etc.. That's why we've been rallying here. I'd imagine a good eventual trading range for this, perhaps by January, would be $1.00-1.25.