by some posts on the board, Eberwein may be totally out - maybe he realized that it is a messed up company/management...or like me - that you shouldn't play with foreign companies as they can hurt you badly and there's not much you can do. anyhow, as I usually say - be careful with it.
You may remember this Eberwein play - shares fell apart on Friday when they announced a secondary share offering at $1.60/share (15% where they were trading prior day and 30% below where they were previous week) - so obviously that's where the shares have fallen to.
I have always refused to invest in foreign companies because I do not like the fact that they generally skirt SEC regulations and in general don't follow GAAP financial reporting standards and that I have a general mistrust for them. I also didn't like the financials (however much you can trust them) previously, nor do I like them now.
Maybe you might like it - shares have not traded this low in the past year. Dilution as a result will be about 20%. I'm not sure what Eberwein's current position is.
You don't know what DRAD thought it was worth.
Tax loss selling is going to hit between now and year end. A lot of people jammed in here at prices $2 and much higher throughout the year.
As I mentioned previously, entirely gamesmanship - the letter was specifically constructed to attempt to delay announcement of the PDII acquisition, allowing DRAD the opportunity to make an offer for PDII with no debt and a pot of cash. This is what Eberwein likes - a clean balance sheet with lots of revenue and a messed up management team that does not know how or want to cut costs and turn a profit.
I don't think DRAD has anything coming down the pike unless they are considering how they could make an offer and then immediately restructure to get rid of the $20 million debt just taken. Obviously first step would be terminating the entire PDII board and management. That would likely eliminate a good $5 million/year in expenses right away.
Best thing DRAD could do at this time is stand back and let PDII destroy itself.
Market maker taking them all down...every buy is followed by a sell of 100 shares at the bid.
I'm trying to keep my composure and just keep nibbling to lower my cost basis.
I keep telling myself I'm doing the right thing as opposed to chasing all the overpriced stuff that's pushing the market higher. I'm beginning to wonder what percentage of the Nasdaq index does Apple's weighting give it? If Apple shares fall 20% or 25% what does that do to the index? Just a last month Apple was at $95 - I don't really understand why it's gone 20% higher since. Now the talking heads are out there fantasizing about Apple being the first trillion dollar company - this is a sign to me that this bull is overextending itself.
In any case, I'll stick with my ULBI and other value stocks.
1. why would any retail investor exercise the rights? they can buy the shares in the market for 32 cents vs. 41.
2. After rights offering, there will be 284 million shares outstanding - that is a boatload of shares. I believe even more so then that a reverse split will be needed, otherwise shares are going to trade in a very narrow range and be very difficult to move higher. You're going to have so much liquidity that trading will just be games with people just placing their bid/ask out to 4 decimals and jumping in between each other to get 0.0001 better - like TGC. But there are just so many more shares out there - again, it's going to be extremely difficult for shares to move higher.
3. so company receives $58 million cash in this transaction - that likely buys them 18 to 24 months assuming they can decrease losses.
I just don't like the financial statements. I'm trying to see something positive in them, but I just can't.
I'm continuing to scale in to some of my others that are beginning/continuing to get hit with tax selling. Just nibbling because I have no idea how far down this crazy market might take them - all happening on miniscule volume...makes it hard to watch as the market maker toys with it. After every buy he immediately sells 100 shares at the bid, then lowers the bid/ask - what can you do? Same with all of them. I'm either laughing or shaking my head as I'm watching it happen before my eyes.
So, have a look again - you can get some bargains...you know I'm already in them:
FORD - now at multi-year lows, trading at cash value, no debt, below book value, proxy fight coming on Dec 30. I'm averaged in below the 52 week low of a couple days ago.
ULBI - just no liquidity in the shares. Company is doing better than the numbers suggest. Still has $1 cash/share, no debt, BV = $4.01, share buyback in place.
HSON - Eberwein's 10b5-1 for 375,000 shares was used up earlier this week. I'm surprised that he hasn't been buying more - or maybe there isn't enough volume. All of his buying on the 10b5-1 was at $3.40 and up. Once he stopped buying, shares fell apart.
These above three are sure to be January bouncers. I'm just trying to remain patient as I buy more on the way down.
BYI - FYI, buyout by SGMS is basically a done deal. Funding is done, regulatory approvals done - shares now just a couple pennies below offer price. SGMS shares up 80% since announcement.
if someone steps up and buys a mere 50,000 shares, the stock will go right back to $1.25.
if the market maker continues playing the game, I can assure you - one day around mid-December, that someone is going to be me.
I'm sure his net worth is way more than mine, however, looking at a paper loss of over a million dollars here has got to hurt - it's approaching a 50% loss for him.
I've bought down to $6.77 already. I have GTC orders in at $6.55 and $6.35 - I think market maker knows it as he stopped taking it down just shy of $6.55 yesterday.
True, holding that many shares is quite a deterrent along with the fact his purchase price is over 50% higher than where the shares are now. Also, Jenny Yu holds 5% which would vote along with Wise.
I don't think he's been buying - the volume is so small (when you take out my purchases). However, if he has been, we'll see a Form 4 within the next couple days.
I'm watching it in real-time action. Simply amazing. After every trade whether buy or sell, market maker manages to take the price down with 100 shares hitting the bid after it.
Removing my bids - will just watch it fall until the shares find a bottom - I'm not playing this game.
after every trade, he sells 100 shares at the bid.
I've seen this game many, many times - only one purpose...to scare people into selling to him. With FORD, he's having a field day because trading volume is always so low - just get someone to buy or sell any amount, then lower the bid, sell 100 more and wait for the next victim. There really needs to be a good amount of buying to get it to go higher at this time. I've been buying, and it's having no effect whatsoever.
it can only continue for so long.
It may be tradable for a short-term bounce but I don't like it from the business perspective. Look at quarterly/yearly sales/earnings - both deteriorating and they are losing $10 million per quarter. I also don't like that there are so many shares outstanding - they will likely need to reverse split then issue shares to raise money.
Not meeting my safety requirements at this time.
This is a Karen Singer investment. It's a niche tech company that makes a decent profit with no debt, very good margins and cost controls. As a result of that and having a good amount of cash the dividend is justified and can be sustained. See EVOL for similar. It's another Karen Singer company that has done exactly the same with hefty dividend as well as special dividend. They return value to shareholders. Unfortunately in this market, investors are not looking for value but instant gratification with press releases every week about growth with not a care about posting losses.
I'm happy Elder specifically used the phrase "profitable growth" in his statement. He gets it - it's about long-term, profitable growth and not the headlines you make to juice the stock this week.