And then it hit $10 in Mar 2002. You can also reminisce that it was $5.69 in Apr 95 and hit $37.50 in Aug 97. What about when it was $4 in Mar 2009 and hit $30 in May 2012? So, if you study history, it went up 7 fold in 2 years (95-97),up 5 fold in 1 year (2001-2002) and up 7 fold in 3 years (2009-2012). Thanks for reminding us that history will repeat again. But it will stick this time because it will be from real revenue growth from their FDA approved products.
pmt, I see your point on how many longs over here are happy with how management is running the show, without any regard for the stock price. Eye opening - that's for sure. Looks like I will take it upon me to keep pushing management. Better to try something new and fail than succeed in doing nothing...
maya, Seth is running a public company. So he is directly accountable to shareholders who own his company. This is not his backyard project to take his own time to hatch. If he wants to take this private - then sure he can take his time and be answerable only to the creditors. But since he took over, the stock is down 80%! He can continue to plot his scheme for long term domination but to completely ignore the stock price today (did he even mention that he is disappointed with the valuation once in the CC?) is downright irresponsible and grounds for termination. That is my only contention. I am not a buyer from $10 - so can wait. But there has to be a catalyst for shorts to cover and there isn't a better choice, unless they are not confident of their plans and need to hoard the money for their paychecks...
The time is right only after certain valuations are reached. When you are 10-15% below cash levels, that is when timing is everything. And institutions won't throw money in with the way management is communicating right now - no way. Many think Q is a lost cause. And they are not flippers either - they are long term investors. But management exactly knows where they really are and if they are confident of their plans, they must do this for the shareholders. You got to see my justification holistically. If this is a dying company, then what you say is true. If this is a growing company, this it makes all the sense in the world to do a share buyback (and raise money in the future). If they don't do it, then I would worry if they really know what they are doing, business wise. For someone who has 100K shares like me, I can't understand your logic, unless you are an insider who gets compensated in other ways. I really don't want to debate this topic. This is my last post on justifying my stand to you. You can have the last word if you wish.
PS: Even the discussion of a share buyback is getting this stock going today - LOL!
rup, keep the humor going. That's the only thing that will keep us going down here. BTW, are you short, long, or "no position - just here for banter" category? I never know on any given day...
Ok, let's just agree to disagree. I never said they can buy 20MM shares down here - not possible. It will be from here to $8 like you said (10-15MM shares) - which will keep the momentum going to said target. They continue doing whatever they are doing behind the scenes to make the gains stick (like growing sales). Of course, if they think there will be no progress made this year, then I agree they should be worried about institutions bailing and shorts coming back. But my plan will be welcomed by every shareholder, big or small, unless they love to sit below cash levels and hope that management will trump the shorts and analysts eventually. Can't believe we are actually arguing about this, being on the same side position wise. I have never heard about share buyback as a catalyst in the 6 months that I have been here. It is time to do something different to get different results, especially when trading below cash. Most probably it will not fly as management has not been shareholder friendly. But we should try. Better than arguing back and forth on a message board.
Chris, that's easy to explain.
1. The $10 target (which was just a suggestion) will be reached by the triple play of short covering, institutional adding and growing sales and income from Avanafil (and Q via partnership). That can be reached in 3-4 quarters.
2. The shelf offering is bought by investors, institutions etc. Obviously the story this year has to be good like partnerships, growing sales etc. No sticking it to the analysts to read between the lines.
3. NTC, Blackrock will buy (see 1) if they know that management is doing something shareholder friendly that will directly lead to a valuation adjustment. Right now, it is a shot in the dark as management is keeping everything close to their chest and not revealing much.
So, they have a new view of partnership which they didn't before? In other words, it is an 'absolute must' now rather than 'nice to have' before? OK, at least you got something new out of them.
I don't think they studied the share buyback strategy like I have laid it out. Shorts can't short it back down as the free float is almost gone now. They can only short a few million, even if that. The historical max has been 40MM shares. The very thought of 15-20MM shares being purchased systematically by the company is going to get them scrambling and institutions adding. And it is not to hold for several years either. They will get the money back and 3 times or more back when they sell into a secondary, which will also build a new base at $10. I am not going to leave this initiative easily. The ignorant need to be educated. LOL!
pmt, it takes less than 5 minutes to do what I did. Time much better spent than posting here. The past is history (the company had a $3B market cap and was smug), the future is a mystery. Live in the present, that's why it is called the "present". Just do it and then you can continue to complain on the board (which I am doing as well!).
Chris, This is a short term strategy that WILL work to get back to fair value. And it will cost only $50MM out of $313MM. It is not a calculated risk. Shorts HAVE to cover as the company starts buying back shares and sending the stock price up. Brokerage firms will start calling in for funds (to shorts) to protect their interests. The company will make $100-200MM in the process by selling it back. This is the best time to do this because they can afford to do this right now and the company is so extremely undervalued and trading below cash in hand. I can't imagine any long opposed to this as a near term strategy to raise money for the company.
Guys, please confirm when you have sent the email and what you sent. Little fish like us can also turn activist if we work in unison and bring about a common message. I intend to call and talk to IR and even write to management, if they don't provide a satisfactory response... I hope you, chris, mooky, bubble, pmt, maya and others follow my lead in sticking it to the shorts which is management's near term job - period!
And 15% margin is not a wash by any means. 15% of $3B in 4-5 years is $450MM in earnings right there and that alone is good for a a $15B market cap. Even more realistic if I include Q. Such large market caps are all wet dreams at this point in time, but the market is so big that it is achievable if smartly implemented.
Chris, They need $80MM for OPEX this year plus $20MM for CVOT (at most). They have $313MM in the kitty. That leaves $200MM + whatever they get in milestone, royalties, licensing etc. If they do what I suggest, they spend $50MM this quarter on share buyback and sell back $200MM on a secondary early next year. This is the ONLY WAY the shorts will be forced to cover (other than a buyout which I don't support). They get an extra $150MM in just 1 year - to pay down debt and pay for CVOT. This is a brilliant idea if I should say so myself :)!
Please go to their website and submit a question via their investment relations form. Here's what I submitted just now:
I am a private investor with 100,000 shares invested in Vivus. Words cannot explain how disappointed I am with the current street valuation of our company. The company is trading way below cash in hand or $3/share. Why are you not doing anything about it? I understand your long term plan to grow the company but the analysts and shorts are not agreeing.
Why can't you use some of that cash hoard, say $50 million, to announce a share buyback? That will be the best investment the company can make at this point. The company can then sell the shares right back to institutions via a secondary at $10 and use the proceeds to pay off some debt and pay for the CVOT trials. The shorts will be forced to cover if you announce a share buyback and that itself will get the valuation in line with peers ($8-10/share). Please uphold your fiduciary duty of creating shareholder value right away. Talk is cheap. I expect to hear a positive response to my query. Go VVUS!
I shall post their response, if and when they respond....
The idiotic management doesn't realize that. Their best investment and strategy would be to announce a masive share back (say $50MM worth) and sell it right back to institutions in a secondary this Fall when we are rocking on revenue and earnings growth. I am doing what the company ought to. Bought another 7K shares just now. I have 100K shares @ 3.25 average. This will be one great contrarian play over the next 2-3 years and I am putting my money where my mouth is...
chris, so from what you are saying, the management is smarter than what the street is perceiving them as? Zacks and JPM lost confidence in Q and said they have lost all momentum there. There are a few instances where the CEO is smarter than the street, like NFLX when they first bet on online streaming and moved away from DVDs - much to the chagrin of customers and analysts alike. But just a handful success stories there. I agree that Seth and co are deliberate in their long term plan but their scant regard to the current stock price is deplorable. They could at least do something like a share buyback if they think they are so smart. That would yield a 400% return in less than a year and they could sell back into a secondary offering at $10 and raise more money for CVOT. Or start buying shares themselves to show confidence in their plan for Q and S. I simply can't praise them for the current state of the stock. Sorry.....
The logical question is why spend $200MM for a study, when the product is selling only $50MM per year and flat-lining with increased competition? Just partner with somebody, give them all the rights (including trial costs) and just collect 10% royalties from the sales. And then focus all your energy on the huge opportunity that Avanafil offers (potential $3B market). I can't see an EU approval being the holy grail for Q. I think a bigger sales force (that can be afforded by a larger company) and more aggressive marketing will be more effective. BTW, Looking to buy another 5K shares today on any weakness...
It is easier for it to fly if I just sell. I will sell 1MM shares at every 0.001 increment and this will hit a cent and I can simply cry for not holding the whole thing.