James-
First of all, the spread is not always this wide. If the market makers are getting whipped around, they're likely to widen the spreads. If you ask your broker, you might be able to get in between the spreads.
PSDI is grossly undervalued now. You're correct that the float is small, and that is somewhat responsible for the volatility. But if institutions were not in the stock, it would be much calmer. Institutions own more than 50% of the stock, while insiders own at least 30%. There are only about 10 million shares.
If you want to read all of the news from the company, try their press release archive prnewswire.com
or visit their home page psdi.com
Aside from tech stock suffering and thin floats, there is a fundamental explanation for the drop in the stock. Management has changed recently, with the founder and CEO, Bob Daniels resigning, and a new CEO coming in. In addition, PSDI has been focusing some of its business toward the internet, with regard to linking its MAXIMO software product to an online maintenance products supplier. Any time there is a big change in management, and a slight change in business direction, stocks tend to suffer.
If the stock holds at $27.5-28, I'm going to buy a lot more, since this might be the last time it gets this low. The stock could be worth $50 right now without being overpriced. It's a great bargain at $28, currently trading at a P/E half its growth rate. Compare that to the software industry as a whole, which tends to trade at more than 1.5x its growth rate.
If you're interested in investing in PSDI, I recommend you call them at (617) 661-1444, and ask to speak to Jennifer Gray. She can send you an investor relations packet with the recent annual report.
Welcome to the thread, James.
TDW |
