I think we've lost focus on what management is supposed to do for the shareholders. Their job is to run the company, and they have done an outstanding job of that. Revenues are growing, profits are growing, they've had multiple successful acquisitions over the years. They've streamlined operations with a new warehouse. They've signed new distribution deals.
That's what a good management team does.
My favorite stock market related quotation is from Benjamin Graham (and requoted by Warren Buffet):
"In the short run, the market is a voting machine, but in the long run it is a weighing machine."
Right now, we are looking at the market voting that Navarre is not worth much. Trouble is, with the naked shorting, the system is allowing them to stuff the ballot box. It is not management's job to fix the voting machine - that's the SEC's job (which they don't seem to be interested in doing). Management's job is to make sure the "weight" of the company continues to grow, and I think they are doing an excellent job of that. Eventually the "weighing machine" will do it's job and we will get back to a reasonable valuation. In the mean time, I've been buying and my confidence in management is unshaken.
I really liked your analogy comparing naked shorting to stuffing the ballot box. One of the best one line descriptions on naked shorting I've seen.
I agree that management's job is to "run" the company. That's a given. Management works for the shareholders. Growing the company, to take profitable advantage of business opportunities, is management�s prime job. Most longs, who have looked into Navarre's operations, think the company does indeed know how to run it�s "business", meaning the various activities they perform to generate income and ultimately profits.
However, the generation of income and profits (and all the encompassing activities that those things imply) is only part of the job of management. Should a company be aware and take action (if required) when it�s publicly traded stock is obviously being manipulated? It seems to me, as a shareholder, that it is part of management's fiduciary duty to pay attention to this activity. They need to determine answers (not speculation, facts) to some basic questions. Who is behind the act? To what purpose is he acting? How is he affecting the change? Are there any illegalities involved? ect., ect. The answers to those questions can aid in protecting the shareholders value in a number of ways. For example, class action legal firms tend to be attracted to sharp changes in share prices, especially steep declines. That�s the trigger. Then, just as short sellers, they look for any negative information on the company to create the basis for a "shareholder" class action lawsuit. If it can be proven that manipulation has occurred in the stock market, to have caused the decline in the first place, that fact may assist the defense team in any class action lawsuits. Companies settle these suits out of court, for sums in the millions, to avoid prolonged litigation. While insurance does indeed cover part of these costs, it is the shareholders, in the end who have to pay these costs.
Another reason to take a proactive interest in stock manipulation is it may provide guidance into strategies on how to combat such tactics whether it is in court or by direct company action. It also assures the public that the company is paying attention to the value of its shares and will not sit idly by as someone deliberately runs the stock down or up. Companies and shareholders are victims of pump and dump schemes too.
Unfortunately, with Navarre we have a management who has failed to pay attention to obvious price manipulation in the stock. In this regard, it not doing its duty. Sometimes when a bully strikes, the best thing to cause him to cease and desist is a sound bollixing. Navarre�s management has demonstrated by action that it is na�ve, timid, fearful, and is afraid of standing up for itself. Passivity in the face of aggression only invites more savaging of the company and its shareholders. And, that�s a darn shame.
Thanks for the very thoughtful reply (and the compliment on my analogy - coming from you that means a lot).
You make a very persuasive argument that management should be more proactive in dealing with the stock manipulation. I guess I should allow my view of the job they are doing to drop a couple notches (but I reserve the right to be annoyed by some of the ranting that is going on on this message board ;)
Despite all of the noise on this board, I find it useful to read - especially the posts by you, g_bowen, and ExtremeJim (and a couple of others whose names escape me right now).
Nice post. My only disagreement would be use of the word "action" in last para. - probably should be "inaction". NAVR mgt seems to be relatively invisible in recent months while pps has been thrashed. I'm still optimistic about NAVR & its prospects and believe it a steal at current pps. However, a strong positive message from NAVR in some form seems appropiate. (It would also help eliminate the garbage that is filling up my ignore list.)
Your post is good. However, management's main priority and responsibility at any publicly traded company is to create shareholder wealth. This company's management team has done little to do that. The operational part of the business is the most important, but when you report bad numbers or have accounting irregularities, thats a management problem. Further, when you dont release a strong pr statement, or say something when your stock is taking huge haircuts--thats a management problem.
I dont blame them for naked shorting, regular shorting, etc.. However, they should come out and reiterate guidance or say something while shareholder value diminishes.
Do any of you have a clue?
They have not released the impact of the restatement yet! How can you reiterate guidance? They don't know what guidance is at this point. I am sure the SEC would love to hear them comeout and say "hey we reiterate guidance, other than the effect of Mix and Burn". You think it is bad now, if they did that the storm would get even worse. You can't rely on our books but hey look at our guidance, aren't we great? Too funny! IR can do nothing but ride this out until they have all the answers. The worst thing they could do now is try to side step it or even worse come out with half baked anwers.
... hasn't happened, yet, which may be a good sign. Additionally, they shorts aren't covering at this level, yet.
I'd say that we're getting closer to the max pain point. It's really starting to hurt, me included so don't start flamethrowing.
There's got to be some big news for this drop. Either the company's financials are totally hosed or something else as significant.
where have you been - your right, managements job is to run the company - I guess all the mistakes and bad news PR's were not managements job! they put the price here just as much as any shorts did. the shorts just tokk advantage of the "great job" management has done.