One way to challenge an opponent's arguments is to attempt to stretch them to the point of absurdity via reductive reasoning. My trading would indeed be easier if success only required following insider buying or selling. Then I could just peruse the abstracts of the latest insider trades and make decisions accordingly. As I've said before the insider selling merely confirmed my suspicion due to other factors that LBIX was overpriced.
That said your use of SIRI to make your point is a crummy example. This is clearly an example of insiders having known exactly what they were doing selling the stock considering how it's fallen 50% over the last year.
Kind of like LBIX don't you think?
Siri is another company with CEO the lone buyer and all other insiders selling.
You should also short a few shares
Naturally, I'm a buyer of that stock as well.
I do believe that PE, even now for a growing co like LBIX, matters but it's not the only reason I'm sceptical about LBIX. Here's some of the other reasons;
They are severely underfunded for what their proclaimed ambitions are. If you've read their reports then you know that they have almost no cash and have used up most of their small credit line. They're basically self-funding out of their pos cashflow which btw for the year ending in Feb '06 was actually slightly negative.
Their product is too expensive. We don't need to debate that a juice cocktail should not be selling for nearly double what other cocktails on the shelves sell for. They might become a niche product but there they'll stay on the fringes.
I expect that it will be a lot longer time coming, should they ever gain enough traction, to overcome the drag of slotting and marketing expenses in order to become profitable.
The history of food manufacturing is littered with products that failed to win markets. A common rule of thumb is that 80% of new food products fall by the wayside. Soy20 anyone?
And yes I do view the orgy of insider sales as indicative of what the insiders thought of the stock price as set by you folks who are for the most part small retail traders (there's practically nil institutional interest).
That's not to say that the company was blameless and merely took advantage of an opportunity that lord almight just dropped from the skies into their laps. No, this is a company that used all kinds of blatant self-promotion to try to kite their stock price. Whether it's those reliably glowing never-a-discouraging-word monthly newsletters or buying an analyst rating from Taglich Bros for $21K/yr they've done whatever they could to convince you the stock was underpriced. Meanwhile they nearly trampled each other trying to unload entire positions into the inflated market they created.
They have profited mightily from you their shareholders. And for that you should feel screwed. But many of you make excuses for them rather than admit you were suckered. This is a harsh message but it's true.
Now for JSDA. I don't make a case about insider selling in JSDA because for all of '06 they've sold 320,000 shares, roughly a third of those sold by LBIX, while having 62% more shares outstanding than LBIX. Put another way they sold the equivalent of 1.25% of the existing shares while LBIX'ers sold 7%. That's a factor of nearly 550% greater selling for LBIX.
Now I don't get what 'success' you're attributing to JSDA. A look at a 10-yr summary shows the company has indeed grown sales but while remaining virtually profitless.
'06 is working out better for them but this is a business built around a quirky idea which might work but as likely will burn itself out as fads so often do. It's currently rated one Moderate Buy and one Hold by two (unbought as far as I know) analysts. That's pretty tepid. They project JSDA to earn 11 cents in '07 giving them a forward PE of 90!! And that's of course if they economy doesn't go into recession, something which is becoming a greater possibility with each new econ report, which will surely whack all stock prices but the highest PE's most.
So you keep doing your thing, I'll do mine and we can compare notes again in a few more months. For now the beverage stocks I've shorted are forming a nice addition to my track record of momo fads.
Your response was interesting but avoided my simple point:
You have been repeatedly arguing that PE and insider sales have a lot to do with determining Lbix's stock price. All that I said is that your thesis is suspect at the very least from Jsda, another small beverage stock. Jsda's success in the market has not been a 3 month fad. It has continued for over 5 years. During all this time, Jsda never had a low, or even moderate, PE and has had plenty of insider selling. That history and that of other small beverage stocks should give you some pause.
As for Hans, I've never played that one. It is a much larger company and is in danger of having its main product become a fad. I said at much higher prices that if it were smart it would have used its then expensive stock as currency to diversify. It may yet do that despite the fall in its stock. The real possibility -- and history -- of consolidation in this industry is one of the principal reasons why a PE/insider sale focus won't generally work IMHO. I'm long Lbix and very long Jsda and think shorting either is very risky as deals, and market sentiment shifts, can come at any time. We'll see how it works out next year.
Here's the record of my trades-
3/10/2006 HANS -200 103.45 20682.35
3/13/2005 HANS -200 105.45 21082.33
3/17/2006 HANS -200 116.25 23242.28
4/21/2006 HANS -200 136.88 27368.14
5/8/2006 HANS 800 152.56 -122047
5/25/2006 HANS -200 177.45 35481.91
6/9/2006 HANS -200 166.85 33361.96
6/9/2006 HANS -200 168.59 33718.1
6/23/2006 HANS -250 172.9 43216.66
7/7/2006 4:1 split -2550
8/7/2006 HANS 900 32.19 -28968.06
8/8/2006 HANS 1000 28.34 -28347
8/18/2006 HANS 1500 29.84 -44767
0 . . . . . . 14,024.67
5/5/2006 HANS -200 147.25 29449.09
5/8/2006 HANS -200 150.85 30169.05
5/10/2006 HANS -200 198.5 39698.77
6/15/2006 HANS -200 165.35 33060.97
6/15/2006 HANS -200 162.25 32441
6/21/2006 HANS -300 164.85 49445.47
6/23/2006 HANS -250 172.8 43190.67
6/30/2006 HANS -200 189.3 37850.83
7/3/2006 HANS -100 198.85 19876.38
7/7/2006 HANS -100 206.2 20611.36
7/7/2006 4:1 split -5850
7/21/2006 HANS -400 43.99 17587.44
8/1/2006 HANS 500 44.41 -22210
8/7/2006 HANS 2700 32.85 -88700
8/28/2006 HANS 1000 29.51 -29515
9/13/2006 HANS -1000 29.46 29454.02
9/13/2006 HANS -1000 29.76 29754.08
9/14/2006 HANS -1000 31.85 31844.02
9/14/2006 HANS -1000 33.2 33193.97
9/20/2006 HANS -1000 35.77 35763.9
10/4/2006 HANS 1500 30.85 -46280
-7500 . . . . 43.558 . . . 326,686.02
5/8/2006 HANS -100 152.75 15275 -1
5/8/2006 HANS -800 152.55 122040 -4
5/9/2006 HANS -200 169.44 33888 -1
5/10/2006 HANS 1100 185.815 -204396.5 -5.5
5/15/2006 HANS -200 180.85 36170 -1
5/15/2006 HANS -200 186.55 37310 -1
5/15/2006 HANS -200 190.65 38130 -1
5/15/2006 HANS -200 194.85 38970 -1
5/17/2006 HANS -200 193.8 38760 -1
5/19/2006 HANS -200 183.38 36676 -1
6/12/2006 HANS 400 156.79 -62716 -2
6/13/2006 HANS 700 156.99 -109892 -3.5
6/14/2006 HANS -400 155.76 62304 -2
6/23/2006 HANS 500 172.85 -86423 -5
0 . . .... -3934.50
RECAP . . . . . -7500 . . . . 44.903 . . . . . 336,776
As of today I have a 38% return on 7,500 sh shrs with an absolute gain of $129K.
Luck, my friend, has a special place in this game. That said you won't sport 50% and better annual gains if that's the only thing you got going for you (more like a min 10% yearly loss at best!) And good traders look lucky. But they have a hand in creating their 'luck'.
What always amazes me are those who when finally dealt some luck don't recognize it as such and allow faulty understanding to turn their backs on it. Those of you early into LBIX have no idea how lucky you were (or how unlucky those late were). Truly. Instead you handed off your rightly won luck to the Insiders (and shorts) to run away with.
Just for fun I've decided to show you how a pro trader short takes on a giant . . . HANS.
I watched HANS rise hundreds, then thousands of percent since '04. I watched shorts get immolated left and right along the way. I looked at the earnings and said 'no way this is too early'. But by the time they reported earnings in Mar '06 though I decided to take a small gamble. But HANS kept on rising and at each new level I would toss a few more short shares on the bar-be as we say in the common parlance. When the May earnings came out it was obvious that HANS's revenues and earnings had been plateauing for about six months. I wasn't impressed by the Busch deal and I began shorting more aggressively. By the time the stock peaked I was a manageable $125K in the hole but I had succeeded in raising my short ave from 26 to 40. The rest is, as they say, history. Crash following the four way split followed by earnings disappointment.
I originally started shorting 200 HANS at 103.45 (split adj 800 @ 26), ie- very cautiously. If if I'm right about the fundamentals, and I am a high percentage of the time, but too early on the trade, I don't sweat it. I always start small so if I'm lucky and the stock continues to go up progressively better opportunities for shorting become available. And short I did adding to HANS at stepped higher prices with my highest score at 206. By the time I started covering after the last earnings tankage I had -11,600 @ 40.13 (unsplit adjusted 2,900 @ 160.52).
Now luck would have meant that I waited longer to begin shorting and gotten my ave a lot closer to the peak 52 instead of 20% below. I won't catch the absolute bottom either. But I don't mind as long as I can make 20 - 50% returns on trades time after time just by being roughly right (or lucky if you prefer).
As you've said, nobody knows what trades anybody does unless they're announced in real time (and even then ...). Your analysis would have led you to short Jsda at 3, 4, 5, 6, 7 and 8. Jennifer Cue and others were selling, the PE sucked. If you didn't short then, you lucked out but your methodology for analyzing small beverage companies has to be questioned. Which I did.
No JSDA doesn't bother me. I'm short 20,000 @ 10.20 and I'm quite prepared to wait for it to go down or short more if it goes up. It's PE is a joke, revenue and earnings growth are almost nil, and I don't expect to see Jones sodas taking over America.
I'm also still short a tiny 2000 FIZ (having covered most my adjusted ave on the remaining is 43.03).
I'm short 7500 HANS (ave 44.90) having covered part.
And I'm still significantly short LBIX (97,600) at a nice price.
Suffice to say I love these fads. Beverages. Homeland security after the Madrid train bombings in '04. The oil and gas p&d's in the summer of '05. Avian flu in the winter of '05. The slew of tiny microcaps that got spiked on Tues. The opportunities to score big are nearly endless. Finding short shares is the biggest hurdle.
Are you as excited about the likely torrent of LBIX tax loss selling as I am?
You're getting too cocky. Doesn't Jsda's performance trouble you even a tad? It's not trading based on PE, your favorite measure. Lbix is much, much cheaper than Jsda based on P/S and other metrics, and essentially trading for nothing or very little more than its stable co-packing business. And Jsda is hardly a fad. Look at a 5-year chart. I bought more Lbix yesterday at 3.19 but still have much more invested in Jsda. Looks like a decent newsletter can do a lot of good now that we started going up. Declare victory and move on or risk losing the gains. Just some friendly advice which I don't expect you to take.
I can only hope that I had an effect in your decision to sell LBIX while it was higher. I like to hear when I helped others to make or save themselves some money.
As for OCTL I can't short .BB's and I'm not big on speculating on them long either. It looks like you've had a great run over the last few months. Time to cash in?
As for OVEN are you rec'cing it long or short? Again it might be time to take profits.