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Charles & Colvard Ltd. Message Board

  • alergic3 alergic3 Jan 13, 2010 8:31 AM Flag

    Manipulative Stock Buy-Back

    I am starting to rethink this company.

    The stock buyback manipulates the stock, holding the share price above $1.00 per share, regardless of the market factors, consumer confidence, or the amount of money the company loses.

    It can only prop the stock up until they run out of money to buy stocks back.

    The sweet thing is, nobody has to buy at a higher price than they set their stock buybacks for, which is probably about $1.01 or so.

    I noticed that insiders have not been buying lately.

    I am sure it is quite legal, but is it ethical?

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    • stellarbeautysuperiorbrilliance stellarbeautysuperiorbrilliance Jan 14, 2010 12:45 PM Flag

      <<<nobody has to buy at a higher price than they set their stock buybacks for, which is probably about $1.01 or so>>>

      The stock hasn't been at or below $1.01 since mid November. Are you saying there were no buybacks in second half of November and early December (just before requalifying for listing) ? Doubtful. Of course maybe it was insiders and others keeping the price up. I'd love to hear they did it without company funds.

      The point is that the stock is still well above $1.01, so if buybacks are only around $1.01 then the stock must be staying up without buybacks. (By the way, talking about a price of about $1.40 for CTHR as "up" is a relative thing, and not really appropriate. The stock is DOWN from $16 IPO price or $26 or whatever the peak was, so Mgt needs to get CTHR back to those levels and above to talk about "up", or to consider themselves succesful.)

      • 1 Reply to stellarbeautysuperiorbrilliance
      • The stock stayed under $1 until the stock buy back was announced, even after the new president announce he was pleased with the almost $500,000 quarterly loss.

        The fact that it is up in the $1.30-1.40 range reinforces my statement. A stock should go down when a company is losing that much money, not up. They switched law firms, and now switch they switched marketing firms. It is the old shell game, which shell is the pea under?

        I think that the only reason it is as high as it is, is because someone is buying a few shares at a high price to increase the value of their other shares, and when it gets high enough, they will sell, and it will fall back to about $1.00 per share, until the $1 million buyback runs out, then it will fall back under $1.00.

        Now me, I bought in low, and took my profits, and kept some of the profits as stock. I can't lose. See you at the annual meeting!

    • It's intelligent......company has too much cash and too much inventory relative to its needs......as mgmt rebuilds CTHR's business by lowering the price point of its product to market clearing levels, they should continue to buyback shares as long as the share price is below tangible book value (which by my estimation is a very hard book value).....it adds value to your investment, so you should count your blessings that you have inhereted a new CEO who appears to use his brain as it relates to capital allocation (and who actually has a track record of turning jewelry businesses around)

      • 2 Replies to watchthedownside
      • stellarbeautysuperiorbrilliance stellarbeautysuperiorbrilliance Jan 14, 2010 12:53 PM Flag

        <<<company has too much cash>>>

        Are you kidding ? The company is way short on cash, after wasting tens of millions of dollars. They need MORE cash in order to properly and effectively market/advertise moissanite, to build awareness and generate consumer demand.

        <<<as mgmt rebuilds CTHR's business by lowering the price point of its product>>>

        If they lower the price, that will be counter-productive. That will lower margins, without creating any more sales (at least not sell-through at consumer level). Price is NOT a problem at retail....moissanite jewelry sells for very attractive prices for unique FINE jewelry. A wholesale moissanite jewel price drop will only hurt C&C's long term success.

        <<< has a track record of turning jewelry businesses around>>>

        That means nothing. C&C isn't some retail chain. C&C is trying to introduce the world to a new product. It requires completely different talents.

      • I don't know. After 2 weeks in office, the new president was "please" with an almost $500,000 quarterly loss.

        They are intelligent though. They never let the customer know the real weight in carats of the stones. Moissanite is about 8% less dense than diamond, but they only give a "diamond equivilant" weight, so when they tell a customer they are getting a 1 carat "diamond equivilant", they are giving them a 0.92 carat moissanite.

        The stock price is being held up artifically, and they are selling 0.92 carats as 1.00 carat stones.

        Sort of like saying 0.92 pounds of cane sugar is the same as 1 pound of fructose sugar, and marking the package as 1 pound cane sugar equivalant, instead of 0.92 pounds of fructose sugar.

        It may be intelligent, but the question still remains, is it ethical?

        Will the shareholders wise up?
        Will the public wise up?

        IMHO, they need to be more honest with their investors, and their customers.

        The stock price should be over $1.00 because the stock is worth over $1.00 per share, not because the company has buy orders in place that shore up the stock price at the expense of reducing the company's asset's.

        If they are not marketing it as a fake diamond, they should not be giving diamond equivilant weights. Their customers should be given the actual weight in carats of the moissanite gemstone they are buying.

 
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