sweez,
After referencing the high p/e (which won't take TPG earnings into account until combined earnings are released in April) you said you hoped investors would conduct DD. Three points in response: 1) I think the large investors, those that move the price of the stock, have done their research. The major houses holding this stock (Herzog, Gruntal & Co, Knight and Mayor & Schweitzer) didn't dump on the day the conversion was effective. Neither did the main holder Equus. About 80,000 shares traded that day; if those were all sells it would've dropped far more than a few points. The first few trades of the day were sells in the 100-300 share range -- perfect for the MMs to quickly notch it down. (Granted, it's tough to sell with few buyers.) During the week preceding the conversion there was a great rise in volume, more than enough liquidity for the houses to dump large chunks. That didn't happen. If I were Gruntal, holding some 600,000 shares, and I thought the merger was crap I would have sold during the high-volume days before the split -- you don't really think they were going to blindly hold the vast majority of their stake through the merger...they did their research and held.
2) High p/e's mean nothing to the real money on the street. An un-adjusted 166 may scare of the average joe checking out ATPX on yahoo, but it means nothing to fund managers and houses. Look at MSON: p/e around 200 as it went from a split-adjusted $8 to $16 in two months. (It got mugged by the worst MMs on the street during and after its split, but check out the last 8 days of block accumulation -- all while sporting a nice p/e of 190-209.)
3) The company can now compete for contracts that, previous to the merger, were out of reach for either company. There is too much info on this one to elaborate, but the synergy between Alcore and Marion alone allows ATPX to supply aircraft skin products at an incredibly attractive price.
Something encouraging (at least to me): Allen & Co. probably would not have been involved with the merger if they thought it was going to flop. Allen, very picky in their involvement, has an excellent track record in these matters.
Lack of institutional buying: 1) no one buys during the 3-week post-merger honeymoon, when the co's are free to cancel. 2) Equus and insiders own some 75% of the stock; there's not much out there.
Provision for upset LUNN holders: if TPG's earnings come in lower than expected, as several on this thread have implied, holders will receive compensatory stock. Folks can take it, cash out and move on. (Also, remember that Lunn's divisions fit snuggly into many of the voids TPG had -- and we will not see the revenue and earnings benefits of this coupling until next year. This is not a momentum stock.)
This is all just IMHO, and I could be wrong on every point. But, as CEO Jim Carter said, I think the "sun will shine again" on this stock. Just remember we don't have a whole lotta sun in the winter.
Looking forward to spring,
sandy |
