Big "A": I think you and the rest will enjoy this one.
Rather amazing
High Tech Features
"I Have NEVER Sold A Single Share... My Personal Target Price Is $200"
By Shlomo Greenberg
The Internet has turned the entire world into one great big Hyde Park where everyone can say what they want and everyone else can react accordingly, as they please. Message boards have become one of the most important indexes for Wall Street investors, especially the younger generation. At first, they regarded message boards with total disdain but with time it became clear that a lot of serious people were expressing their opinions about the capital market – and even using message boards. Why? For the simple reason that millions of people read them.
These message boards show what the technological revolution has done for us, and brings proof positive of a global revolution. There is nothing better than these boards to prove the success of the information revolution.
But this is nothing more than an introduction to one of the most wonderful stories we’ve ever encountered, the story of John Frank Albano, “Cencomco” as his message board nickname would have it, who passed away on September 3 of this year.
Albano was born in Louisiana, in 1936. In 1959 he began working in computer software, in the wonderful city of New Orleans. He founded a company called Century Computer Co. The first three letters of each word made up his online nickname, “Cencomco,” which he used whenever he sent a message to the Yahoo! Boards – and Albano sent a lot of messages on one single subject: M-Systems Flash Disk Pioneers (FLSH) of Israel.
The first message sent by Cencomco was on March 31, 1998. It was message #37 on the share (today there are over 7,300), entitled: “flshf future.” It reads: “i have been a software professional since 1959. In my opinion, disc-on-chip most significant hardware development in 5 years and will play a key roll in next 5 years computer and communications industries. flshf gross sales $11m 1996, $19m 1997 will exceed $100m within 18 months and potential billion dollar company. avg p/e computer storage segment 30+. This stock will triple in next year. buy and hold.”
Make note of the date: March 31, 1998. The share stood at $7.125. This was the ultimate “chutzpah,” to put it mildly, forecasting that a company like M-Systems would think of having $100 million in sales by late 1999, not to mention the potential $1 billion. In addition, imagining that this share which had been stuck at $4-$5 since 1994, would move within one year to over $20, was a pretty big dream.
We assume that this message would have passed like so many other messages, as just another bit of nonsense from someone upset over a share they couldn’t unload, were it not for the fact that a year later, in February 1999, the share rose to $4.5 (it had dropped to $3.125 over the course of 1998). Cencomco continued, doggedly and determinedly, to describe his dream in detail so precise that, in retrospect, it would be hard to find another case like this one. Flash disciples waited over a year until Albano’s prophecy came to pass.
In May 1999, the company held a private placement with the participation of several major funds including Templeton and Lehman Brothers. At that point, the share was still wavering between $4.5 and $5.5. In August 1999, things began moving and the company ended 1999 at around $32.
True, Cencomco had erred. Since posting his first message, where he promised the share would triple in value within a year, the share had fallen to almost half its price, but in March 1999, two years after the first message, the share hit $77. At that point, all was forgiven. Tenfold in two years is not all that bad, especially as most shareholders (ourselves included) got in after they heard that companies like Giza, Templeton, Lehman and others were in, and the price at that time was about $5.5.
Over 100 messages were sent from Cencomco’s PC in New Orleans to the Yahoo! message boards and the man began to make a name for himself as someone who really understood not only the company but technological developments as well. His wonderful analyses, written in layman’s terms, were read by an ever-increasing audience.
What’s interesting is not just that he predicted exactly what would happen at M-Systems, but that he also taught many online players a style of investment we’ve encountered only among veteran, mature US investors: focus, in-depth research, and the ability to sit tight for a long time without being influenced by short-term upsets.
In May 1999, a Miami-based reader, nicknamed “trauma_guy,” sent Cencomco his analysis of M-Systems’ apparent mistake in not aggressively entering the music field. “FLSH will be too late because companies like SONY are already getting into the game after seeing the success of the Rio,” he wrote.
In his response, Cencomco explained at length why “trauma_guy” was in error. “Your arguments are good and so is the technology... from an end-users viewpoint... but unfortunately, there's always two sides.” Albano went on to analyze the way in which music copyright organizations would act. He explained copyright laws at length and described a situation in which people would not be able to duplicate music as they liked. “Meanwhile,” he wrote, “I'm glad FLSH isn't in this market. Like the kid in the candy shop... everything looks good, but if you try to taste them all, you'll probably wind up with a bellyache!"
Cencomco never visited M-Systems and never met the management, although he very often e-mailed them comments on subjects that bothered him, from allocating options to public relations. At one point, the company even considered hiring him as an advisor.
M-Systems founder and CEO Dov Moran noted this fact in a moving letter to Albano’s widow, posted September 11 on the Yahoo! message board and entitled “Goodbye Dear Legend.” “At one time we even thought about hiring him to do the market analyses at which he so clearly excelled, but that would mean that he could no longer write on the BB, and we decided that that would do too much damage to the BB community (besides, we knew he would turn it down anyway).”
In late July 2000, Albano posted two relatively long messages on Yahoo!. At that time, the share wavered between $60 and $70, and Albano was already considered the guru of M-Systems on the message board. In these two postings, which were to be his last, this wonderful man from New Orleans outlined the principles of his belief in the company and the share. We wish to present some selections, which reveal to the young Israeli investor, a world of thought and decision-making that we Israelis are unused to. Albano, for his part, sounds like the clients who bought Teva from us a decade ago, and still hold them today for the same reasons Albano cited in explaining why he would not sell M-Systems before it hit $200.
In the message, “Eyes that will not see,” Albano explains his belief in this investment, beginning with a story from the New Testament. “In Chapter 19, St Luke relates the parable of the gold pieces. It is the story of a rich nobleman who goes to a far place to obtain a new kingdom. Before leaving he entrusts each of 10 servants with a gold piece ...and instructions to ... ‘trade as you will until I return’. Upon his return he finds varied results. The most productive servant... having 10 gold pieces... is rewarded by being given authority over 10 towns. The least productive... who held tightly to his gold piece for fear of losing it... is admonished ‘why didn't you at least put it in a bank so I could have earned interest?’... has the gold piece taken from him and given to the servant with 10.”
”Like that nobleman we as investors have entrusted our assets to several companies... including FLSH. FLSH managers have been good stewards of our investment... many of the longs having realized returns... NOT TENFOLD but nearer 20 as of Friday's closing... including a rise of 122% since Jan 1, 2000. Also like that nobleman we specified NO ENDDATE... only substituting "When I wish" for "until I return". During the past week some executed their right to sell causing a fall in the FLSH stock price from a recent peak of 90 to Friday's closing of 72 and 9/16. This was their prerogative. In my opinion... it also was a mistake!!!”
Albano now details his theory on why Dov Moran is too conservative in his estimates, and why the company actually has no real competition. (Read it in full for yourselves in messages 6161 and 6162 from July 24, 2000 on Yahoo!’s M-Systems message board). Albano did explain why Moran refused to commit to a 42% growth in Q3 2000 gross profits, but also explained in a very logical fashion why 42% growth was actually possible. The company, of course, exceeded 42%.
He ended his thesis with: “In the valley of the blind, the one eyed man is king. Stay focused, the triple digits you seek are just around the corner ...probably September when business on Wall Street traditionally resumes. Regarding a possible split ...I would like to see greater than 2 to 1(increase in the float hampers manipulation) and I see no valid reason to wait till 100 or any other pre-conceived value to execute it. An announcement...anytime soon... regarding increasing authorized shares would be appreciated.”
Two days after Albano’s death, the company announced a 2:1 split. Before writing his two final messages, Albano had written: “The man whispered "God, speak to me" And a meadowlark sang ...But the man did not hear. So the man yelled "God speak to me!" And the thunder rolled across the sky ...But the man did not listen. The man looked around and said "God let me see you" And a star shone brightly ...But the man did not notice. And the man shouted "God show me a miracle" And a life was born ...But the man did not know. So, the man cried out in despair, "Touch me God and let me know that you are here!" Whereupon, God reached down and touched the man ... But the man brushed the butterfly away and walked on.”
”Don't miss out on a blessing because it isn't packaged the way you expect,” he wrote. “The object of the above item is ...obviously FAITH. I will break a long silence by letting you know... as an indication of my faith ...my average price (including commissions) is well under $5... number of shares runs a ways into 5 digits (the rest of my family ...on my rec… combined... hold more than I). I have NEVER sold a single share ...my personal target price is $200 within 18 months and my intentions are to be holding at least the lion's share and hopefully all shares when that goal is reached. I could take a very nice profit now ... like the newbies... Profit IS my objective ... but would feel as if I had left a job before its completion. That's a major difference between we longs and many of the newcomers... patience! I think it stems from the fact we FOUND this stock... while most of them HEARD about it!” That was the sort of man he was.
After his death was announced, the message board was covered with condolences. “Please tell us... it's not true,” wrote LD789. “You where the leader of this forum and I bought flsh at 3.5$ and hold it till now after reading your excellent analysis about flsh, competitors etc. It's not the right time to go when M-system just do its first steps… And if… God bless you and your family.” Jerome from Belgium, who bought M-Systems in 1994 and learned from Albano to appreciate them finally, over the past two years, wrote: “Good bye professor!” And trauma_guy wrote “Great people don’t know they are until they pass on.” And there were many others for whom Albano was a guide, who felt they had now lost their way. “You wrote that you and your family would not get out before $200. What does that mean? That the share can’t go any higher?” That’s how far they were willing to follow in his footsteps.
On September 8, Cencomco’s wife answered the flood of messages on the site in message 9632, entitled “A Sad Goodbye.” “This is a very difficult post for me. My husband, John (Cencomco) did indeed pass away Sunday, Sept. 3 and was buried yesterday. He suffered cardiac arrest after a long and debilitating fight against emphysema. I sincerely thank all of you who posted such moving tributes to him. He truly enjoyed writing for the board knowing that he helped so many by recommending and educating them about FLSH. He has filled five binders with copies of his posts and many of the replies. To date we have not sold a single share of FLSH, nor do we intend to sell any in the near future. In his memory, please keep the board clean and informative. He is now watching us from 'the other side'. I will be depending on you longs to keep me educated. You have a hard act to follow, but each of you in your own way is doing a fine job.”
Another extremely touching letter was that of M-Systems president and CEO Dov Moran. Moran had never posted on the message boards, but he clearly followed them, which teaches us investors that company managers are indeed interested in what small investors think. They get direct feedback from their big investors.
” I never met John in my life. He never called me and we never talked (except by exchanging e-mails from time to time -- which, because of John's amazing writing abilities, felt very much like talking in person). Still -- he knew a lot about the Company. He understood the markets we are in and where we are heading. By contributing his penetrating analyses to the BB, he became a part of our lives. He was a symbol of morality and dignity and took us all (the Company, managers and investors) to a higher place than we were at before… I liked him a lot…
“ John -- you are surely reading this email somewhere in Heaven,” Moran concluded. “We will never forget you… We will continue to live up to your hopes and expectations for the Company success and beyond.”
It’s touching but beyond that, this story teaches us a few things, like what it means to believe in something and not give up when that something doesn’t change. It also teaches us something about the personality of the company’s president, and his attitude towards investors. It also teaches us what it means when someone who understands technology and investment analyzes a share, and lastly, it teaches us never, ever to put down message boards.
The ultimate question remains: Buy M-Systems now, or sell and wait for a lower price? Don’t ask us. As mentioned earlier, we sold a good part of what we bought on the way to $50, not $90, and we’re now holding onto the remainder until forecasts that the Dow will hit 111,000 in 2005 come to pass.
Published by Israel's Business Arena on September 24, 2000. |
