Frank,
<<Insiders, as often as we would like to give them credit for knowing the future often don't.>>
Right. There has been enough backtesting of stock performance after senior inside buying to
show they're not clairvoyant either. Also, my own periodic chats with the GRIN CFO since early
1998 have made me feel that I have as much clue as he has, about where the price should be (his
knowledge of the toy business is quite another thing though). I just hope their personal
windfalls are in 401k-type accounts - my guess is Canadian CGT is much more than in US !
<< I would contend that they (The insiders) really don't know the potential of the Pokemon
phenomenom. It is very difficult to believe and/or understand.>>
To be honest, the movement of the stock on the widespread dissemination of the Pokemon
news was a complete surprise to me. Since then, I have begun to notice the almost revolutionary
takeover of the minds of children in the 5-10 age group. Whether I'm on the street or in a
store or meeting with friends (this weekend a friend's son was carrying his Pokemon folder with
him when they came to visit), they are talking amongst themselves about it or harrying parents
about it. It also seems to cut across all the ethnic groups. Whether this lasts 5 minutes or
5 years, I don't know but given the impact, I'd say the latter.
<<The hard part is to have the discipline to let the future become the present and then the past.
The test will be in the earnings of 3rd/4rth qtr and release of a Pokemon movie that will
presumably drive sales.>>
...that's how the real money gets made IMHO. Aside from Pokemon, here are the reasons why I
continue to hold a big position:
* Continued strong sales in Furby, WCW (these have helped them to record earnings in 1st half '99)
* Promising new lines such as Jellabies etc (see there press release)
* Continued growth in non-toy (Grand concepts was 0% of sales in '97, 10% sales in '98. In '99 ???)
* New growth in Ark products (the exotic birds, Titanic puzzle and now 'Great Big' trucks etc)
* The e-commerce possibilities
* The takeover possibilities (they're trading at about 3 times CASH now (no LTD) if all the options
were exercised - that's cheap even for a value stock, never mind a promising growth microcap !))
* Seasoned management with a 40 year track record in the toy biz. They're not 'fly-by-night' IMHO.
* A transformed company, financially speaking. The company's cash windfall should really help
them reduce their typically large interest expenses and finally frees them from the worst
aspects of foreign currency losses. (Read the posts here around Jan '99 to see how important
this is).
Hope this helps,
Frank McV
fortunecity.com |
