Strategies strategies strategies ??.
Fortunately, all is not lost, only if you make it so.
For some Monday morning quarterbacking, at no charge, here is what I think has happened.
Some year ago Ed Bramson elected to choose the Internet arena for an expansion direction for Ampex. At the same time, "Phase I" of the net experience (the portal providers) and early catalogue sellers (ie. Books on amazon.com) was in full swing. This led to wild valuations attributed to everything.com up to and probably including "dogcrap.com."
At the same time, in usual "Mr. Market" form, Ampex was grossly and emotionally way oversold at .69/sh in late 98. Mix all this primordial emotional soup together, and at the first opportunity, one gets rapid spikes at the slightest hint that Ampex will become Ampex.com or in this sense iNEXTV.com.
In practice, while there was an absence of buyers on the way down, why else .69 (based on projections?), on the way up there were plenty of buyers. Buy on the breakout, follow the momentum - avoid the opportunity cost of "dead money" - yea sure.
Meanwhile, Ampex was very circumspect in releasing homefront news which would support these heightened an exaggerated investor expectations. Certainly there were factual announcements of new products, some alliances and some strategic investments - but these announcements were factual and specific.
However, these announcements always seemed to come up short. Finally this led to a disenchantment with Ampex and the executive management as being too reserved, closed mouthed and un-visionary - in sum "The wrong stock!." The preposterous nature of this conclusion is dashed if you take a long range view of the events undertaken by Ampex for just the last 12 months alone!
Now the "ugly" truth may be coming out. The investments in AENTV, TvoW and Reiter may have been only "tactical" stakehold positions primarily for the purpose of gaining first hand experience and some degree of knowledge leverage. Companies do this all the time - "buy rather than build."
Now iNEXTV is about to launch. Mind you in a matter of months. Months. Furthermore, the possible underpinnings of profit in iNEXTV are themselves "Phase II" of the Net experience. Content, especially content produced for the Internet, (distinguished from BCST styled re-purposed for the Internet), is itself a new media form. Ampex may have the very first production studios for this. The Advertising stream revenues is currently in test status and will have to await further study and analysis.
Ampex has no Analyst coverage. While a "named" analyst would find it difficult to make projection in this early changeable stage, the fact is that such potential coverage was probably discouraged at this time by Ampex themselves. While Ampex may have a general direction in mind, specific projections are not yet quantifiable.
Again, another bone of contention with the shareholder community. Not only no news but no coverage as well.
What's an investor to do? Well, if you are short term in outlook, sell is the best course and sell in droves is what the small investor appears to be doing - why else 2.63/sh (based on projections?). If you are longer term, then IMO , two general strategies prevail.
ONE: hold for another two years - regardless. Fiscal 2000 (through Feb 2001) is probably going to be a year of experimentation, study and learning. Revenue streams will become identifiable and quantifiable toward the later part of year 2000 - hopefully. Delivery of serious revenues will not begin until Winter 2000 - 2001 (14 months away).
TWO: lighten up by selling into "spikes" - effectively rallies.. Therefore, since short term momentum players have already been sufficiently burned, hopefully, there will be no buying on breakouts; thus, spikes will not become and as a result, we may see a quiet, slow but steady appreciation (or a sideways drift with some positive inclination) over the next number of months.
Incidentally this slow appreciation will probably freak out the remaining short term and intermediate term holders, and they can be counted on to exit during this interim as well; again pressure on spikes and rallies. Or , in other words, in the near term, some will say "The market has judged Ampex and the judgement is that it is a POS dog. Get a life and look elsewhere!"
If one had purchased below 3.00/sh then, IMO, you have a good value holding and can look forward to at least 100 to 300% appreciation over the next two years. In itself, a respectable gain, but there is the potential for much much MUCH more - in time.
If one had purchased over 4.00/sh, especially if on upthrusts, then you are investing as a momentum player in a growth situation. Here, you must seriously question why you are in this stock and not elsewhere. I should say that you must learn from your mistakes and not repeat those of the KM disappointed investor experience again.
Personally, I am probably way too long and in at an average cost of 2.38/sh. In say 4 - 6 months, but only if pressed (meaning that other positions are acting better) would feel comfortable with lightening up some on a rally.
My purchase program began in Nov 98. I saw Ampex as a turnaround play with a potential of 8.00/sh. Using the Ben Graham yardstick of allowing 2 to 3 years for a turnaround, I come up with Nov. 2001 as my end point.
Ed Perry |
