Christopher,
The CTYS story looks similar to SYQT (bought at $3.00 in July) that I analyzed quite deeply, but gave up after a while on the accuracy of my analyses. Most on the SYQT thread were very mad at the company that they thought was diluting the stock by issuing more and more convertible preferred stocks. I had made a few posts, but the crowd there used to be very unruly. In one of the posts, I argued that the preferred stockholders must know a lot about the company that most on the thread do not know. Why would outsiders choose to be preferred stockholders of SYQT if they were not convinced that the company was in a path to recovery? This was my question and someone got very mad with my posting. SYQT went down to $2.5 and I was not very happy, though it was a small investment. Now it is $5.75 per share after about 2 weeks of my post. You can look at my post there. Obviously my post did nothing to the stock, it was the fundamentals that could be inferred from the recent actions of insiders.
CTYS has a similar, if not better, situation. The only important event we can bank on is the massive recent investment at concessional rates by those who obviously have better information than us. In fact, CTYS is better positioned than SYQT in relation to its competitors. SYQT was almost being extinguished bt IOM, whereas CTYS is still a leader. There is no hesitation for customers to buy CTYS products -- loans. You may decline to deposit your money in a risky bank. Why would you decline a loan from a bank that offers the same deal or better? So, it is not like SYQT not being able to sell its products in the face of competition.
Obviously, we can ask why would these new investments be made in CTYS if the new investors were not convinced that the company would recover? Why would the CEO pump in another $1,000,000 into the company? I have made an estimate for earnings (about $.45 - $.55), for lower delinquencies, etc. But these estimates are based on public information and guess like the Moody's rater is doing (following the Oppenheimer downgrade of the stock with no new information). The only insider information we have is what we can infer rationally from the insider actions. I am afraid, the raters have very little awareness or understanding of rational inference. All the bears, shorters and put option holders will go haywire like SYQT shorters once the tide turns in the direction of fundamentals. I hope this stock does not elude the rational inference!!!
Sankar |
