I can feel it in my bones.
Conf. call was everything I would have wanted. Some great questions asked, especially later in the call.
Expect to be FCF positive in Q4.
Are not as worried about step downs a year from now as questioner was. Have cash, ability to sell assets with pro forma treatment. Potential to turn around the businesses. Etc.
Have considered many alternatives, but seemed adamant in their desire not to "sell [assets] at the bottom" of the market.
Note the insider buying a few months ago. And the large cash position. And the high current ratio.
"We do think you could see a nice improvement in the results as you move forward."
They approached the bank group in 2008/2009 because they saw problems, but, despite the covenant step down, they clearly indicated that that is a long time away, and they do not seem particularly worried to me, and they have no plans to approach the bank group at this time.
To me, with these results, if this is as bad as it gets, solvency is virtually assured, and near term risk has declined dramatically. With that in mind, considering the enormous long term potential, it is time for this stock to stop discounting doomsday, and for the Street to face that if this company gets back to earning, in a few years, what it used to, this could readily be a $20-30 stock again. And I simply don't accept that, considering that potential, we should be selling at $2.35. The losses are really quite manageable, and the book value per share is HIGH. I'm convinced this stock will be $4-6 by Dec./Jan...and probably $3.00-3.50 in the next 2-3 weeks.
I'm putting HERO on "super strong buy."
As of today's close this suddenly went from being my 12th largest position, to my 4th largest position.
You're letting the tale wag the dog. "The stock looks weak" is irrelvant. It just means we are working through the "dumb money" that doesn't understand what these results mean, and are "relieved" to be able to sell out at a gain over where it was trading a few days ago. Prediction: Counting yesterday, this stock will close up for 8 or 9 of the next 10 trading days, and 15 of the next 20 trading days.
If it all goes as planned we should be good. There is always a risk that they will need to dilute in 2011 but hopefully that does not occur. Without dilution we could see 6 to 10 dollars but if they dilute we will likely stay in the 2 to 4 dollar range for sometime to come. Fingers crossed that things continue to improve.