There is a thread below yours where several folks mention buying in much higher and hoping to sell once they can clear a few more $; others just throwing in the towel. Others have lost faith and will move on, shorts will cover with a satisfied smile. The full spectrum of hope and fear, smug mistrust and a new whiff of doubt that all must sense if not quite believe.
In that kind of scenario, it is hard to imagine any near-term catalyst that will chug this up above $20 other than a surprise PR piece that will come out of nowhere. Faced with such a situation, I'm torn between averaging down and just bailing at this level and waiting for a month to get back in. Locking in a loss is sometimes good tax policy. My risk would entail that element of great news that would - KA-CHING - send the buyers back in. In that the company did not see fit to preannounce the bad news, it would be cruel to announce major good news before next earnings, three months away.
So, to your point as to whether this is gold or trash, that depends entirely on circumstance and situation. If I had the expertise and industry familiarity to have no concern whatsoever, it would be easy to double or triple down. Lacking that certainty and even though I agree with management's explanation(s), I will not make this an outsized weighting. Whether I'll sell and take the loss, buying back proportionately more shares at this new lower range remains murky right now, though that would be my intent.
There is always risk in these investments and we are wrong to assume that everything will go smoothly or as projected. My Father worked with agricultural interests all his life and there was always the risk of a crop failure or hail or even that a slowing economy might depress consumption. In instances such as these you dust yourself off, consider the situation and begin again. FIO again? Why not?
If the management tries to get in the mind of investors (which I do not recommend) then yes, bad news. I do not think a delay in bulk order (supported by their comment in the CC on the intimate working relationship they have with these customers) is bad news in the minds of buisiness owners. In addition, the company has seeds of opportunity planted for the upcoming season which I suspect will be a bumper crop.
Excellent post!! Another analogy to your father's business: He had to execute is operating plan to the BEST of his ability to even have a shot at making money in the good season and survive a bad one. Good dirt and good equipment alone do not guarantee success. Work doesn't stop went the crop is brought in (oh, hell no). This is my challenge to the leadership team. The marketplace is a brutal and unforgiving place. This is why I struggle with keeping my shares or dumping at the right price. I want to hear from them that they "get it". Thanks again for the great post.