I suspect the stock has now bottomed. We are now waiting for (1) news on new credit facility (2) improving profitability (margin) this quarter (3) news on selling more parts of the company. I'm still of a view that the market has hit this stock too unfairly. Sure, the previous CEO in conjunction with the board has turned out to be jackasses for paying too much for JBA and not acting decisively enough to clear the deck of driftwoods. However, to be fair, not all is management's fault. After Y2K, companies have exhausted their funds on IT spending. Seems like the IT environment is starting to turn around, as we see improved quarters recently reported by IT companies such as GIB and SAP. A company like GAC with over 10,000 dependent customers has a lot of resilency and should be able to weather that storm period of inept management and unfavourable IT climate. I happen to be one that is expecting clearing after the storm... that the new CEO and chairman can cut costs and improve margins. I'll be watching for this when the company reports this quarter.
Usually, I would not average down on a bad investment. However, I've done so. Don't think GAC is a terminal company. With revenue of $900 million, captive customers, a slew of e-subsidiaries, and low debt... it would be a huge surprise too me if it turns out that the situation is terminal. Sometimes, one has to make a difficult and risky call when investing. This is one such situation. Would GAC be terminal? If so, sell and get out with something. If not, this could be an opportunity to buy a stock that is at deep discount sale. |
