Agree. Except almost every broker, every bulge bracket firm, every strategist advises even seniors to have exposure to the stock market. But given the risk in this cycle, a possible recessionary meltdown and liquidity/currency crisis, hedge fund redemption calls, I have no argument w/any retiree wanting to be 100% cash. When the computer algorithms take over trading there is no safety net for equities.
The two biggest risks, really for most technology and small cap stocks as well, are going to be margin liquidation and redemption calls on hedge funds. Feels like late 2008 playing out again and picking up steam. Some hedge funds re going to see AUM cut in half from a year ago.
If you are heavily weighted toward any of: small caps, energy, materials, industrials, cyclicals, emerging markets, 3D companies--your investment portfolio has likely taken a 30-50% hit. That pushes retirement plans from 65 years old to at least 75 years old. The average American male lives to be 76 years.
And now the Chairman is running the show and getting 100,000 stock options and 25,000 shares of restricted stock for doing so, well for part of the year at least. The same guy that has failed to enhance shareholder value during the entire seven-year auto upcycle, and failed to put in place a solid, cohesive and stable management team. He's the Chairman, the leader of the company in terms of oversight and game plan. It has been seven years of epic failure. A betting man would bet that his just announced options will expire worthless, and possibly his restricted stock as well.
It's actually worse than it looks because a significant chunk of that cash may be held overseas and subject to a big repatriation tax hit if they wanted to access it for use in the U.S. or at the corporate level. They may have to tap their recently increased credit line at some point in the not too distant future. What a mess they have on their hands, self-made too.
Everyone can see it coming. It may already be discounted. Everyone has to logically assume the worst w/the CEO being severed just before the release in about a week. The company almost never hits bottom line quarterly numbers anyway, and this could be particularly ugly w/the surprise departure of the CEO. Assuming a horrific number, "knowing" it may be coming, and then actually seeing it printed in a release may be two different things. But it should be largely expected. Honestly at a $6 share price, we may be beyond earnings numbers and quarterly reports at this juncture. We may be at the point of asking the fundamental questions of just how much are the company's technologies and assets worth? How do you structure a company w/great technology exposed to a global manufacturing recession to remain viable and grow? Do we even have a viable business plan in the first place? Should this really be a stand alone company? Why haven't we prospered in the best cycle for the automotive business for decades, if not all time? Do we need to re-think everything from the ground up? First step has to be to stop the cash flow bleed, immediately.
again I am not sure if it is so much of a pricing issue w/the technology or an economies of scale issue. Just thinking a whiz-bang state-of-the-art technology should have positive net margins, if it is disruptive more so that should be the case. Can't square the circle of their pre-eminent proprietary technology w/the bottom line results they have been delivering. May be naive, but feel disruptive technology should 1. sell like hotcakes 2. have positive margins.
My guess is they will realize sale of the company is their best option to enhance shareholder value given current circumstances, and hope they come to that conclusion soon. Shareholders deserve a double digit share price for the technology here, and some other entity w/deeper pockets, a more diversified base, and deeper BOD and management team might execute its implementation and pricing better. Just my personal opinion and I am sure just one of many.
nope. just reading what should be fairly obvious to all, especially the BOD. This is a classic Harvard B-School case study.
If the BOD drags its heels much longer the 60-80% premium you seek could come off a much lower price per share, and that will make no one happy. I'm not sure the Board realizes the risk in waiting to sell the company versus the years it will take to rebuild strategy, a smoothly-integrated management team, and executing a new plan. You are talking about implementing a near total turnaround after failing to take advantage of the most robust automotive market in history. This thing could implode internally at any time. I would imagine employees have resumes at the ready. Almost all stock options are out of the money and at real risk of being worthless. There is little incentive to stick around in an environment where the company is losing money and cash is evaporating. Directors and shareholders value is at even more risk than the recent stock price declines suggest if they do not act soon. If they wait too long they could be looking at a take-under just to salvage a fraction of shareholder value.
Never count on any institutional holder to bail you out. They are so well diversified this type of position is a drop of water in an ocean of their investment portfolio. But the directors who themselves personally own a fair amount of stock and have options under water and also one foot already in the grave combined w/legacy issues, those folk may have some sense of urgency. If nothing else they might get tired of dealing with search and severance issues at some point and just push to hand the technology off to some industry counterpart who sees the value in it, which could be considerable. Just trying to put together and mesh a new management team and get it running smoothly could take a 2-3 years. Directors are running out of time, life time that is. Probably have to rely on a private market valuer. This is semi-dead as a public investment alternative. Under $50 million Enterprise Value isn't worth most public institutional shareholders time and effort. Yeah, now under $50 million Enterprise Value, ouch.
They will ultimately have to dodge probably more than one de-listing challenge and have given zero disclosure to shareholders as to the game plan or next step. Why would any serious executive consider taking a position running company that has been moribund for nearly seven years, especially into the teeth of a global manufacturing recession? The only reason the former CEO was in place was likely his significant share ownership in the company. Failing sale of the entire company, there is a decent chance that his equity and that of the Case family zeroes out. Sales to China could fall to a deminimus level, after having been nearly halved. The strong dollar will restrict almost all other foreign sales to modest levels. The U.S. has been in a manufacturing recession for months. Venezuela and Brazil and Argentina are close to bankrupt --so it is no surprise the S. American market for meter sales is comatose. Extrapolating the negative net cash flow from operations fiscal year-to-date would have the company out of cash in a little over a year. Depending on the length of the current global manufacturing recession, the post mortem could be held by mid-2017. The stock sells for less than its net working capital, but still is hardly cheap. It might be wise to drill down on the inventory valuation given collapsing sales to China and the severing of a Latin American distributor for Xact. Xact has been just one window into the failure of the entire company over the last half decade, but it epitomizes the ongoing trouble at the company.
Or will all the government money be spent to rescue the major banks again w/little left for highway infrastructure ? It feels like late 2008 all over again but w/ the Debt/Housing crisis reverberating from China this time instead of the U.S., and banks moreover needing a bailout from bad loans to all the major energy companies. Of course the funds are approved/earmarked for highway spending, but in desperate times all bets could be off to avoid a worldwide financial collapse (e.g. Sequestration). We should have let a Depression happen in 2008/2009 to cleanse the system of all the bad actors. Instead we now get a series of Great Recessions to accomplish the same end but taking a generation instead of a few years. Russia, China, Canada, Australia, Brazil and most MidEast countries are at particular risk of currency collapse, i.e. currencies that will ultimately trade at mere pennies to the U.S. dollar. It could be worse than 2008/2009 as this time you have a commodity collapse paired w/a bona fide Financial Crisis in China. Global recession would be the benign outcome, global deflation the not-so-benign outcome.
whether it is exploring strategic alternatives, head count reduction, pruning low margin product lines, exiting China, hiring a new CEO, moves to further lower the breakeven point and adjust the cost structure, etc. In a vacuum both shareholders and employees (w/resumes at the ready) are going to walk. And they are going to walk soon. It is not only the overhanging volume of stock that is nervous over the current uncertainty that matters. It is also also the marginal seller who will impact share price as buyers will remained sidelined and "on strike" until more disclosure is offered. In an illiquid stock such as this a mere 50,000-100,000 nervous shares sold at the margin w/no active buyers could sink the stock to the low $1s. The company better lay out its plan very soon or they will have to also consider how to deal w/ a de-listing action. Lots of stock for sale on the Ask. That will remain the case until the company discloses what its plan is. The fuse burns quickly here. To avoid an equity wipe out they need to move very quickly.
after the cutbacks to senior management pay and allowing for Fed, Oregon State, Soc. Sec. and Medicare Taxes. What is worse, no increases are likely for a while, and any promotion from within would not be much of a carrot. Beyond daily living expenses it will challening for any employee to adequately fund retirement, college expenses or even a nice annual vacation if they are a sole earner. So while labor, raw material and energy costs are not a worry at all---company morale might well be. Can't be much fun getting out of bed to go to work on Monday morning even w/o considering the uncertainty that overhangs the company's future. A Dead end/sword of Damocles work environment tends to be less than uplifitng, not mention nearly all outstanding stock options are virtuallly worthless. Sheesh, just sell the company or take it private and save another few hundred thousand dollars vs. the cost of remaining public.