Let's put aside the price action for the moment.
I state as axiomatic:
When you invest in a company, you believe it will generate excess cash in the future - regardless of its current situation.
In an ideal company the rate of excess cash generation increases.
Excess cash is defined as cash not needed to sustain the current business.
Now if this were my company, I'd be looking to reduce my exposure to this losing division to protect the profits of the other divisions, not taking profits from the others to prop up the flagging division.
Let me tell you a brief story. There used to be a research center in Silicon Valley dedicated to III-V semiconductor material and device research. The research center was a division of a large conglomerate and it was a consistent money loser. Eventually management tired of pouring money into this division and, seeing little potential value, closed it down. The employees were terminated, or in other words left to their own devices.
The castoff employees managed to find work in other companies in Silicon Valley and other areas, which I term "not Silicon Valley". It was not easy for some because the country, and the valley in particular, were in the middle of a recession. In fact, the recession may have been the impetus behind the decision to close the unprofitable divisions - part of a "lean and mean", "take the house down to the studs" wall street media blitz. Anything to get the stock price up so the old guard could sell into the rise.
The castoffs, like seeds thrown into the wind, took root in fertile new companies. Using their experience and knowledge bought and paid for by the old conglomerate, they created new technology. Some of these companies you know others you will know. The conglomerate, on the other hand, eventually shed so many of its unprofitable divisions trying to find its core that it imploded.
The thesis of this story is that the conglomerate made a poor decision. The conglomerate never understood the technology they owned, so did not realize its potential. They thought they were building solar cells and other trivial niche devices. After oil became cheap, they knew there was little value in their technology.
Now show me proof that this stock is starting to climb out of it's hole and I'll be right in there.
I have no proof that ATHM's stock will go up. All I know is that ATHM has a "thing". It is a big "thing", intercontinental, in fact.
You can do stuff with ATHM's thing, although, presently, the stuff you can do isn't too exciting. I like having it and I know you do too. Reminds me of how I used to describe a PC when they first came out.
I am getting very close to a point where I will "mortgage the house" to buy more ATHM
My statement was irrational. I will wait for higher prices to buy more ATHM. |
