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Non-Tech : SMARTFLEX ALSO MEMBER OF THE IOMG FAMILY
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To: rich evans who wrote (463)8/24/1997 9:28:00 AM
From: Joe Dancy   of 558
 
One other negative Rich is that the analyst opinions are all over the lot on what SFLX will earn next year - not that analysts usually have a clue what is going on with a company - which means there is a lot of uncertainty as to the business outlook according to these "professionals". What actually happens as far as earnings goes will surprise everyone since there is no consensus. And the surprise could be negative - utilization lags, customers orders cancelled, etc.

Of course, the Street does not like surprises since it adds risk - but I think the uncertainty is priced into (or in this case, out of) the stock.

One other note - this company is too small for most institutions to jump into - the market captialization is just too small to take a significant position to make any impact on any sized portfolio. That is why we are seeing such inefficient pricing here - if this company was 10 times the size the stock would be trading well above where it is at now. Of course, this inefficiency can make it very profitable for us.

In fact, if you read Buffett's books and his Berkshire annual report he notes in both that his performance never will equal what he has done historically since he can no longer take advantage of the gross inefficiencies of the market in valuing small companies - he is managing too much money for an investment in smaller companies to have much impact.

The growth of outsourcing by OEMs, the growth of the electronics segment of the economy, the technical expertise of SFLX, the positive outlook for SFLX customers over the next few years all point to a favorable environment for the stock to rise over the next few years.

Whether the stock price will rise or not is anyone's guess, but the odds favor such a result, and the longer the holding period the more likely SLFX stock price will do well.
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