Several of our 8 investment partners post on this board under the board name of kbloisab--each letter being the the first letter of the 8 surnames of the investment partners.
When we started posting seveal years ago, it was for the good faith purpose of helping novice investors make logical investment decisions.We were following the teachings of our mothers.They taught us there exists a " Golden Rule " that if we can, we should help those less fortunate than ourselves.
Although we are often disgusted by the gross ignorance and stupidity of many of the posters,we will again try to help those that want to make money in the market.However, inasmuch as what we have to say about Shfl is not pleasant reading, those that want to continue on with their old ignorant ways should not go any further.
All cited financial information is public information which is readilly available on the internet.
LESSON No 1--THE BALANCE SHEET.
All publically traded companies must produced quarterly audited financial statements, including a balance sheet. The balance sheet must be prepared in accordance with generally accepted accounting principles [GAAP].
Because of rampant fraud by the likes of Enron, each financial statement must now be certified and signed by the CEO--in the case of Shfl this is Mark Yoseloff.
GAAP allows many different ways of recording and accounting for all profits,losses, and assets etc. Most critically,because of the multiple financial accounting methods allowed by GAAP,it takes many years of experience in reading financial reports, and great insight to properly understand what financial information is actually being stated.
Warren Buffet, reads thousands of financial reports each year, and via his brilliant analysis, discovered many greatly under valued companies which he bought. After some 40 years of experience Buffet is now the second richest man in the USA, and worth in the region of $37 billion.
The difficulty in reading and understanding financial reports,allows for massive under/over valuation of company assets via grossly over/under valued share prices.Thus allowing huge Enron type fraud, and under valued stocks which are the super buys by the Warren Buffets.
In Lesson No 2 we shall examine the Shfl balance sheet in great detail.
I look at my SHFL position as being partly for trading and partly a core position with the later part one that I won't sell other then under unusual circumstances. When the stock got above $37 I started selling off my trading shares. I've bought these shares back at and around current prices. That doesn't mean the stock can't go lower.
Let me try...
Our group consists of TEN investment partners---that's better than eight since TEN > eight---and, some of ours have Jr. and IV and even IX after their names---ninth generation in the case of one of our three investors whose surname begins with the letter "W!" That investor is "old" money, but don't worry about us, kbloisab2, we make plenty of "new" money, too, when we trade with the likes of you.
Via previous lessons we covered Shfl's horrific balance sheet.
One of the reasons that the balance is so bad is that Shfl borrowed almost $100M to finance a share buy back program.Usually the repurchase of shares is done using retained earnings.Most tellingly, Shfl purchased the shares at about $29 and then issued hundreds of thousands of options to Yoseloff for about $9.Thus, Shfl LOST $20 for every share option it gave to Yoseloff, with Yoseloff making huge profits.
Noteworthy, since Aug/9/2006 Yoseloff has excercised 99,500 options at about $9 and has sold them for about $28.
Shfl represents a text book example of a company whereby the big hedge funds and the CEO makes out very well, and the small fry shareholders get loses.
Additionally, Shfl made an insane purchase of Stargames for $115M--all of which was borrowed from AN OFF SHORE LOAN SHARK BANK in the UNREGULATED Cayman Islands.Unless the remaining $85M balance of this loan is paid off in full by Sept/30/2006 the bank has notified shfl it will foreclose on the loan probably putting Shfl into bankruptcy.
Shfl is presently desperately trying to refinance the remaining outstanding balance of $85M inorder to stave off probable bankruptcy.
FINALLY:Shfl is a good small company that makes good products.It's reasonable value is in the $3 to $5 range.However, it has been run into the ground and taken over by the hedge funds/Yoseloff who have manipulated the price as high as $40 and they now are desperately trying to avoid a price melt down by papering over the huge problems.
By definition, any poster that still holds Shfl is a novice investor and a sure fire LOSER.
Here endeth the lessons.
I sold a fair amount of SHFL in the $37+ range and even a little at $40+. I've been buying the stock I sold at those prices back at these levels. My banker loves me, or loves my portfolio more likely. Thanks for sharing your CONcern about my bank though. (ROFLOL)
One other thing. Stock is spelled S T O C K not S T A L K. Look it up in case you're not sure. (LOL)
Also "a another" is spelled just fine but is simply terrible grammar! Is it any wonder you and Kblahblah find yoursleves on the same side of the fence so often. Birds of a feather...(ROFLOL)