If you've kept up with the stories in the Italian press, the last several weeks, that is what they are talking about. (Shifting some production from Romania back to Italy.) It seems totally DELUDED to me....like this company exists FOR the Italian people. That's absurd! And a betrayal of the broader shareholder base.
I certainly agree the stock is cheap, and the balance sheet strength provides downside protection....but I'm not sure what exactly is going to turn this company around, either, since the CEO doesn't seem to have any courage to face the truth....and he apparently has a board of directors that just "goes along" with his own fears.....and his own whim-worshipping hope that things will just magically "get better" at Natuzzi....with an overpaid Italian labor force.
Loyalty to producing in Italy as a "given" is an outrage, considering the losses we have sustained here. Mr. Natuzzi built a company, and built his own fortune, hand-in-hand with the working class of the furniture producing regions of Italy, and he hates to "let that go." But continuing on living in the past is a recipe, and denying that there are real needs for WAGE REDUCTIONS (or moving more production OUT of Italy), is a recipe for eventual BANKRUPTCY. Certainly no time soon, but in several years, that is exactly where we are headed. Not only does our bloated cost structure prevent us from being profitable in the here and now, but it is causing a slow down, as we continue to LOSE MARKET SHARE, because the consumer is going elsewhere, and is not willing to pay a humongous premium for the NTZ brand name any more.
The company needs to be SOLD, or taken private by Mr. Natuzzi himself. Although I'm not sure, with his spinelessness, vis a vis the unions, and the insular managerial structure he has maintained, any lender would have any confidence in financing him, frankly.
So we're selling at nearly 30x the June 2015 fiscal year earnings estimate?? With no evidence of a turnaround yet? They need to do at least DOUBLE these Street estimates, for the stock to have any chance of trading at the current levels.
That's when they were last year. I expect a "day of reckoning" on 10/9.
It's clear from Becker Drapkin's WILLINGNESS to sell to Primecap, that they are less enamored with Mr. Rouleau, and his chances, than Primecap is....and more importantly, that they are not interested in maintaining the position they once had, because they cannot anywhere nearly see the "whites of the eyes" of a turnaround here. In short, Becker Drapkin considered holding their entire position IMPRUDENT.
and with that in mind, In my view, anyone buying this stock in here is being VERY IMPRUDENT.
When i loaded up on ZLC, back a year and a half ago, when it was at $2.50, there was SOLID EVIDENCE OF A TURNAROUND (and a pending refinance!) and yet, the stock was DOWN, DOWN, DOWN.
Here, there is NO evidence of a turnaround, and yet the atock is UP, UP, UP.
This rally is SOLELY based upon faith in a CEO's name, and history at one company. That is patently reckless of the Street. Or Primecap. Or whoever.
That having been said, I've always liked this company, and the concept, so, despite the fact that I am short, I hope that Rouleau IS able to return them to their past glory. (Even if he is, I'm still convinced the stock is going lower, before it goes higher.)
we have gotten way ahead of our selves here. At best.
Sentiment: Strong Sell
There is no "bone." It's pretty clear that he's more interested in bragging how he's "in at $4," and how I "stupidly" got out at $4. That's really all that matters to him. "Besting" me. Well, since that debate is a waste of time and energy, and I'd rather talk about WHERE THE STOCK GOES FROM HERE, let me just say that "he wins" on holding the stock from $4 on. That having been said, I think the stocks I shifted into, when I got out of TUES, were more WORTHY of their rallies (and I did, indeed, make a killing on the things I bought, when I sold out of TUES).
Rather than "licking one's chops," in all one has made here, one should be looking for the canary in the coal mine....and that is asking the serious question of what this company is REASONABLY worth, at this time. "Trusting" another institution's buying a large block, because they are in love with the CEO is not a strategy. Looking at Mr. Rouleau's previous work at Michael's certainly has at least SOME legitimacy, but it is not the be all end all. After all, Kathleen Mason had a number of years of SUCCESS at TUES, before she started failing. And that suggests to many of us that a considerable amount of the TUES's problems may, indeed, have to do with the business model itself. If such is the case, many it takes Rouleau 2-3 years to get them back to $1 in EPS....and the stock only sells at a 10-12 multiple at that time, which puts the stock at $10-12, TWO TO THREE YEARS FROM NOW. If such is the case, what is the "discounted present value," RIGHT NOW, considering the execution risk? I have an answer for you: $6-8. And I believe that will be established and solidified, after they have a poor September quarter, and (especially), an only modestly improved Xmas Quarter.
The "true believers" we have in here now are not going to stick around forever. THAT, you can trust in spades. They will all head for the exits at one time.
Sentiment: Strong Sell
You may be counting your profit, and I congratulate you on it....but grandiosity is not a recipe for overall success in the stock market. Dispassionateness is.
I agree with you that the contrived thumbs downs, in response to your posts, are irritating and immature.
I should say, just to clarify....I didn't sell 80% of my HTCH at $6. I was out of 75-80% of my peak position, by the time it got into the $'6's.
Suggesting it could go to $100 is reckless.
Your characterization of my trading in TUES vs. HTCH is not worth dignifying. I sold a ton of HTCH at $6...after having loaded up in the mid to high $1's. I am buying back HTCH now, in the $3.50 area.
Finding one's "worst trade," and presuming that all other trades go that way, or that it reflects a "fundamental flaw" in one's investing methodology is sick. Your methodology of getting wed to stocks, and holding them too long, makes you more likely to forego gains you could get elsewhere, or worse, ride something back down....merely because you want long term capital gains....and because you are psychologically more suited to holding stocks for long periods of time....merely because you "enjoy" the satisfaction of doing that. But it's appropriate buying and selling, in the market, that makes for the best investors. Buy and hold, for years on end, would not have made you 45% annualized returns, pretax, over the last decade. It's essentially impossible. Timing purchases in a 3-9 month window, before major stock moves, will. I seem to be getting better at that, over time. Which is very gratifying. I don't cry over having sold TUES at $4.50 or whatever, to have bought HTCH at $1.75, when that one went up to $6, and I sold out 80% of my position at that price (not bought, as you falsely say). This is especially true because, as I have said, the rally in TUES's stock price is mostly irrational, and the stock should be trading at more like $6-8, right now.
But you can give the "market" all manner of "credit" for wild moves in stocks, that you just HAPPEN to own. That's not investing, though. That's riding the "momentum wave."
Well, there's a sucker born every minute, as they say. It will be interesting to see whether B-D sells more shares, on this run-up.
As far as your little darling, Primecap, one wonders why they didn't buy their block BEFORE the last TUES earnings release. They could have gotten it for a hell of a lot cheaper. (If they're drooling all over Rouleau, shouldn't they have bought the stock within a week or so after he was installed? Why did they wait for a cruddy earnings report to get in? That's what makes no sense. It's almost as if they were "chasing" the stock, and "jumping on the bandwagon." But WHAT bandwagon?
No one is questioning that his work at Michael's was impressive. It was. But TUES is not Michael's....and TUES stock has basically tripled, without any evidence of a turnaround whatsoever. In short, the stock is discounting too much of a "guaranteed sure fire winner here." When the more likely scenario is a more modest turnaround, that gets the company, in a few years, back to $1 in EPS.....and a stock price at $12-15....2-3 years from now. Does that make it worth $15 now?? No, that makes it worth $8-10, maybe. Unless they have a "bang up" Christmas THIS year. (If they don't this thing is going to lose half its value....and its likely to sell off significantly, just on the current quarter's results, which, I am confident, will be nothing to write home about.)
This is about cash registers, and little more. But that doesn't get you the money. [lol]
In the low $7.70's. Simply because I think the Seeking Alpha piece may have created some selling.
I'll look to reshort in the $8.35-8.50 range....if it rallies back up there...or, in any case, just before the earnings release.
He said they were going to grow "low to mid" single digits, not merely "low" as you said. So you were wrong on that very salient point.
The reasons, and target, have been previously stated. Increased, sales, increased operating leverage, increased margins, growth in market share. I'd imagine a good target is $6-10, in the next 12-18 months.
Just because the stock is up, doesn't mean you are "telling the truth." You have an opinion. The shorts have an opinion. In the near time, the giddiness has, and will apparently continue to, take over. But that giddiness is based, we all know (including you), on an ASSUMPTION about a turnaround. Not on any thing hard and fast.
Stock probably needs to drop to $2, as a "market-clearing" price, for all the Blum shares.
Company is still hemoraghing cash. I have a modest position, but am not considering adding, until Nov/Dec.