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Magal Security Systems (MAGS) Message Board

  • roboklerk roboklerk Jul 6, 2009 8:19 PM Flag

    Lower Than Before Contract Announce

    ment. What gives? Looked like a pretty good series of contracts, the first we've heard of in a while. Stock pooped, but now lower than before they announced the contracts. Why is this stock such a source of funds an any good news. Is it the revolving door of management that causes concern, or the price that the business was won at, or what?

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    • Sorry second sentence in prior post should begin: stock popped....That's what Freud would call a slip. Honestly it was just a typo--I think.

      • 1 Reply to roboklerk
      • I've been shorting this stock in size (10,000's of shares) off and on since it first popped (no typo) following the Madrid train station bombings (the spike that drove it to 38 in '04!)

        It used to be a darling of the homeland security crowd (along with a slew of chronic loser stocks like MACE, TBUS, SYNX, and several that have gone out of business). I was always mystified at how such a low earner could command such a high PE premium as it traded in the 8 - 12 dollar range. Eventually reality took hold and it dropped to the 6 range. Then earlier this year they announced a series of disastrous results (read my earlier posts), delayed earnings announcements, and the stock dived to the 4 range.

        Now they've filed a NT-20F and without providing specifics they've outlined what they expect to report. Verily it's a disaster.

        Normally MAGS like many underperformers stockpiles some good news to cushion the blow when they report actual earnings. Somehow they even managed to screw this up by releasing the good news well before the earnings. And as regards this 'good news' is it really good news when a company that relies on signing new contracts every year to bring in business signs some new contracts? This sounds like business as usual to me. At best. It did fool some people though since the stock managed to spike a few percent for a few days before reality set in again.

        It remains to be seen what happens when they report losses of about $3/sh in a few days reducing their book value by half. Is that already baked into the stock price? I wouldn't underestimate the gullibility of small retail traders to buy it higher temporarily but in truth this appears to be a classic GTZ (go to zero) company.

        Happy trading.

 
MAGS
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