Bo - Here's my opinion (FWIW):
1. The drop from 10 to 7 was driven by the delay in getting Phase 2 complete (still not completed yet) and the modest volumes from the outset (on eVWAP).
2. The drop from 7 to 3 1/4 was driven by a sharp imbalance of buyers and sellers during the Tech Crash (Part I) that started 3-4 weeks ago and ended on the day I left for my vacation last week. This imbalance was mostly due to margin related selling as well as some opportunistic selling at 6-7 (and at lower levels after that) by those who thought a crash was coming. The large sellers are not totally gone (for example, the market maker whose symbol is WEIN has been selling blocks all day today - every time a WEIN sell order is filled, it is almost immediately replaced with another -- indicating the presence of a sizable sell block). This could be margin driven, short selling, or any variety of possible explanations which do not reflect adversely on the company's business operations -- but that does not make them any easier to take and there is no sign (yet) that it is over.
3. The partial recovery from 3 1/4 to 5 was driven by the buying which re-emerged when prices dipped to 3 1/4 (including from some who sold at 6-7 -- I personally know 2-3 people who fall into this category), as well as the filing of the S-1 for Gomez Advisors.
4. Today's dip appears market driven -- but the large seller (WEIN) is still there, even as we speak.
5. From all appearances, the stock will continue to meander around at this level (4-6) until the next development of a positive nature occurs. That could be in a day, a week, or a month, for all we know. But positive developments are coming, IMHO
Positives:
1. Continued Ph. 2 integration and Ph. 3 integration can only add more users to the system and increase eVWAP volumes over time. The company has stated in SEC filings and informally that initial volumes during the Ph. 2 period (which seems to be where we are now) would be modest, and that bigger volumes would take several months, concurrent with Ph. 3 integration and deployment. So it is not like this was completely unexpected (although most ASTN stockholders had loftier initial expectations). The company continues to stand by its forecast that over the course of the first full year of eVWAP operation, volumes would average 5,000,000 per day crossing (10 MM revenue shares) so they obviously anticipate that the pace will pick up. On the negative side, this has all taken much longer than most of us expected (me included), and has added fuel to a market driven sell off (which is bad), but since the company has plenty of money, and has added what appears to be a top "sales" team from the senior ranks of Instinet, there is good reason to believe that they will get past this "moment" sucessfully without too much brain damage and within a finite time period. My purely personal suspicion is that the drawn out nature of this ramp-up will continue for the short term, but that trading on the system will pick up and will eventually exceed management's stated expectations. I find it difficult to believe that the gentlemen from Instinet would have joined ATG/UTTC if they did not believe that ATG/UTTC had serious upside ahead of it.
2. The filing of the Gomez S-1, the most important prerequisite to an IPO, is now official, and the underwriting team is headed by Merrill Lynch, the biggest underwriter of securities in the world according to the Wall Street Journal. Which means not only that ATG will be able to monetize its ownership of Gomez at some point in the not too distant future (further improving an already healthy balance sheet) -- but also that there is good reason to believe that Merrill (which is also clearing eVWAP trades for Croix through its Broadcourt clearing subsidiary) may eventually commence sell-side coverage of ASTN, as least once the eVWAP revenue stream starts in earnest. At least we can hope.
3. Toronto and Asia continue to loom, and appear likely to be in the middle of "positive future developments" relating to eVWAP in the forseeable future. Similarly, the deployment of eOX, eAS, ePLOB (e.g., the other remaining components of UTTC's "family" of trading systems) are also getting closer, if the company's projections from the annual meeting are meaningful (which was that stockholders could reasonably expect deployment of all of those systems by this summer). The exact timing is impossible to predict from the outside, and management has not met many of the informal timing expectations they have established from time to time, but each day that passes brings us one day closer to the deployment of these systems.
4. There are a lot of coals in ATG's "fire" these days. Any of them might pan out into something that attracts buyers and thus drives up the stock price. This could include things from completely out of left field, or developments in areas that are already moving forward more aggressively (eMC comes to mind, along with the deployment of UTTC's other systems). Although it is inadvisable for investors to make heavy investments based on these speculative considerations, nevertheless, as stockholders, we can look to these things as being an important component of what will restore the stock price to its prior levels, apart from a general market recovery which may take months to play out completely.
5. Despite the concerns some have raised regarding investor relations and Fred R.'s credibility, the management team is still top notch, from the top down, and the newest additions appear to be very positive additions. And the technology is, from all appearances, state-of-the-art as well. When all is said and done, it is management and the technology that we are investing in, without knowing whether they will succeed in turning great ideas and hard work by top quality people into profits and investor gains. So attracting top people is critically important -- and they seem to have continued to attract top people to the company.
Negatives:
1. eVWAP volumes are still very modest -- sooner or later (sooner, IMHO), the company must demonstrate that there is demand for the system that is actually manifested through higher trading volumes. If this is really just a timing issue, as the company has more or less stated, then this is not that big a problem given the strength of ATG's balance sheet. But the stock will continue to be hampered in its recovery if eVWAP volumes fail to grow within a finite time period.
2. The lower stock price has effectively made the Rose Glen private investment more dilutive than most of us expected it to be. There is a limit to this -- RG can only convert so many shares before they butt up against a 5% maximum holding requirement -- but that might lead to more selling in the short term (by RG, to free up shares for new conversions) which may have the effect of keeping the stock price down. My personal belief is that any enhanced dilution is not as significant a "negative" as the cash which ATG received from Rose Glen at a very critical time was a "positive", but there are many who do not view it the same way I do. Still, the importance of ATG's balance sheet in allowing it to survive this tech correction cannot be overstated. Were it not for ATG's strong cash position, as a development stage company without significant revenue, it would have been under a even more time pressure than it already is, and would have been, IMHO, in very serious trouble given how drawn out eVWAP deployment has been.
3. General market conditions for tech start-ups are still very weak, and those stocks, across the board, are still reeling -- today's weakness may be driven by the uncertainties surrounding Microsoft (e.g., possible break-up, softer revenues, etc.), but the fact remains that investors have jitters about these companies as a sector, and will lose those jitters only as individual companies themselves (and the sector as a whole) demonstrates that they have revenues and are profitable, or will achieve profitability within a finite time period (something ATG has yet to do). These weaker market conditions could also adversely affect the Gomez IPO, although a lot can change in 4-6 weeks.
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That is not complete, but gives a reasonable overview of my thoughts on the subject. Other than one small sale to fund the repurchase of another stock which has been hammered in recent weeks, I have not sold any of my stock or warrants in Ashton, and believe that the stock will recover completely (and then some) once all of these things have played out. I do not think market conditions will deteriorate forever, but I also do not think that the market or the stock are completely out of the woods yet. Still, I cannot see the stock staying in the low 4's for too much longer. The Gomez IPO alone is probably worth more to ATG stockholders than the current price of ATG stock. That single reality will translate into a higher stock price in the relatively near future, IMHO -- and even more so if it is accompanied by other positive developments relating to eVWAP, eMC and/or UTTC's other initiatives.
I still very much believe that the company is a good company, well managed financially (thank you Art Bacci), with a powerful vision and the tools to realize upon it -- and that years of planning and diligent efforts will pay off for its stockholders. But it also appears likely that the resolve of the longs will be tested again (it already has been today) and that more information and positive developments need to emanate from the home office before investor confidence in the company is restored. Which is as much a statement on general market conditions as it is specific to the company, though clearly the enhanced quality of corporate communication and the achievement of truly "positive developments", including much higher eVWAP volumes, will be necessary to raise the stock price to the levels we stockholders continue to hope for.
All of this is my opinion, obviously, and you should form your own conclusions based on your own diligence. I completely agree with Fred R. and others that reliance upon internet message boards is inadvisable. I am not in any better position than any other outside stockholder to understand exactly where the company is these days in terms of meeting its own internal expectations regarding eVWAP and its other initiatives, and these thoughts are only my interpretations of information that is generally known (or suspected). Nevertheless, I hope you find the foregoing analysis, such as it is, useful.
MST |
