Tomas,
As you know, and I have stated that here many times, that I am in for the long haul. My expectation for any positive outcome are essentially based on the product that HVSF has and the work that has been done on the product to date. Also, as of recently, I am becoming more confident in the management's intentions and strategy to increase value for share holder, including the management itself.
So, these short term ups and downs of stock price are of a very limited value to me. In that same context, I do not see the reverse split as any thing than a mathematical procedure aimed at changing how the stock and the market cap. is measured. The split in itself will have little, if any, impact on the success of the company in the long term. However, the split will make certain tools available to the management in their financing, product development, and the promotional efforts.
My long term expectation of a possible positive outcome are based on a very simple concept. When VVUS started the marketing of its product, it had a market cap. of about $1 billion, in round number. They have had a recent set back, but I am sure, that soon their market cap will increase and surpass the $1 billion. I believe that HVSF has a far superior product, a very sound patent position, and a very good team of scientists involved in the clinical trials. In my opinion, HVSF in due time will have a similar or better market cap. than that of VVUS, $1 billion.
What separates HVSF from VVUS is 18 to 24 months of time and approximately $20 mil. of cost related to clinical trials. IF one allows a conservative value of 75% to this distance between HVSF and VVUS, then the present fair market cap. for HVSF is approximately $250 million. Based on that, the stock should be trading near $70 or so. Why it is not trading there now?
Two basic reason: the uncertainty that the company will make it to the finish line, and the lack of credibility. In time these factors will improve and eventually disappear. As the clinical trials will progress, the uncertainty will be reduced. And, as the management continues to do things that are judged as shareholder friendly, the credibility will improve. Since, these are expectations only at this time, that explains the extreme undervalued price of the stock. With risk, come reward. If this was a sure thing, there would have been little room for reward.
This discussion is meaningless for those who feel that the company is a scam. They are entitled to their opinion as I am to mine. We all have to live with the consequence of out point of view. It is as simple as that.
Good luck to all on either side of the fence, both the investors and the traders.
Afaq Sarwar |
