Analyze This.
While the markets are giving the appearance of being choppy and unstable, some sectors have clearly shone in the past few days and seem to be emerging as the new market leaders for now. Among those sectors are home builders and paper/wood products companies. This means that one excuse Luxor does not have for barely holding above 52-week lows is: the market.
It is this investors opinion that Luxor and its stock suffer from a more severe disease: a crisis in investor confidence.
While most companies try to temper shareholders expectations in order to be able to surprise them on the up-side, in this investor's opinion, Luxor is guilty of having regularly built up expectations only to disappoint shareholders time and again. Examples of this abound in the numerous corporate updates and letters to the shareholders where the company promises that "next year WILL be the one" since at least 1995. (We're all still waiting.)
If you don't want to look up and read the old updates, a good recent example is the following:
On April 9, 1998, Luxor issued a news release stating that, with the stock then at 2.25 it was turning down offers for financing because it was "..experiencing sales growth.." and "..intends to seek financing, on best available terms, during the peak period of the 1998 construction season..".
On December 10, 1998, with the stock now at 1.28, Luxor issues a news release that states, without explanation or apology, that "The company has agreed to a private placement[...] at 1.15.".
Questions about "financing on best available terms" aside, shareholders like myself who have held this stock for over 4 years need to look at the huge rate of dilution this stock has suffered in that period of time without benefiting from a sustained increase in the price of the stock to offset it. And with little to indicate sales coming to the rescue, one is left to wonder when Luxor will pull the next private placement bunny from the hat, and at what price.
Another good example of carelessly raising shareholders expectations is the notorious LP deal. While Luxor found it fit to promote this alliance-as-panacea since nearly a year, the fact that the deal is still not done shows to what extent management foolishly overshot its own expectations and those of its shareholders. The reasons we are given are many, but in essence LP is in the driver's seat here while Luxor, still wanting to think of itself as the mouse that roars, has little choice but to play monkey to Louisiana-Pacific's organ grinder. Hopefully, for us shareholders at least, some good will come of it in the end.
Finally, the company needs to STOP blaming its own shareholders for its woes. It is a sign of an inexperienced, not to say immature, management to single out a person or persons who have no say whatsoever in the the day-to-day affairs of a company, as being somehow harmful to the very stock they purchased and still own. This is extremely counter-productive and does nothing in the way of restoring what is already a badly damaged credibility. I strongly suggest that Luxor change the way it interacts with its investors. A start would be for management to respond promptly to e-mails, answer the pointy questions as openly as possible, tone down the hype and take responsibility for its own decisions.
As always, your comments are welcome.
*** NEW DOW RECORD*** 10'462.72
Happy investing and a good week-end to all,
FOXY |
