Just a quick note - it's official: KP kills the stock:
<<By Emily Church, CBS MarketWatch
Last Update: 6:17 PM ET Feb 7, 2000 Silicon Stocks
NEW YORK (CBS.MW) -- Executives at the Robertson Stephens Internet Finance Conference in New York on Monday had several ideas why online brokerage stocks have been underperformers so far this year. The most prominent fear the executives think investors have is whether or not growth in the industry is being undermined by the entry of such big players as Merrill Lynch (MER: news, msgs) and American Express (AXP: news, msgs).
Investors "are confused as to how well positioned" the e-brokers are, said Ken Pasternak, CEO of Knight-Trimark. He believes that investors in his own stock are transitioning from momentum investors to value investors, a trend he terms "good." An indication of the shift can be found in the fact that there is less volume in his stock.>>
VALUE????????????????? OK, the low p/e is here to stay. Welcome to Hades. He who comes in here, must forever abandon hope and earthly dreams.
This is it, ladies and gentlemen. I don't care what earnings are going to be like, and how fabulous the European and Japanese vistas. If the earnings are valued at a low multiple, the price will stay low - period.
KP thinks its "good" that this is now a stock for "value" investors. Cool. It will now be valued as a "value" stock, i.e. not a growth stock, or momentum stock. Low p/e - that is value. High p/e - such as NOK, or INTC, or ORCL, or AMTD, or SCH, that is not value. So happens that high p/e stocks, always expensive, tend to get more expensive. An explicitly "value" stock, is not by definition "expensive".
KP doesn't want momentum players. I suspected this all along. That is why he killed NITE's momentum back in April of 99. That is why he never did a thing to stoke momentum, but rather the opposite - poured cold water. He just doesn't get it. It is momentum players that ignite a stock, and allow it to cruise at high altitude, where institutions-johnny-come-latelys step in and take it higher. Expensive stocks like NOK, have always been "expensive" - but they justify it by their prospects, and they only get more "expensive". There is no reason to explicitly want a low valuation by the market. All it can do, is handicap you in your BUSINESS when you need to leverage your capital.
I guess since KP looks at NITE as a "value" stock, he also needs to have "growth" stocks in his portfolio. Ooops, he's already been "diversifying" for that. I get it! Well, it's good advice.
Now NITE will crawl along painfully, as it gains small amounts of share appreciation on huge earnigs. And will plunge badly, when business slows down. It is a low-p/e stock, see... a value stock. A great future - for the 'conservative' investor - the kind that extracts 8% at best, while the market zooms up by 35%.
It may seem a small statement by KP - but to me, it speaks volumes about KP's attitude, likely future actions and prospects for this stock. A word to the wise.
Yes, I know, the usual attacks will commence, so I leave you in peace. I just figured that those who can glean a lot from just a little, would appreciate a heads up.
I apologize for this intrusion, and wish all NITE shareholders the best of luck!
Morgan |
