Good reading
>First, you taint an otherwise overall good effort to explain your analysis by summarily hanging anyone who doesn't agree with your conclusion as being guilty of "superficial analysis." What is that?
I'm not hanging anyone for being guilty of anything. I would consider a superficial analysis as someone who simply read the stock's latest SEC reports and latest press releases, and forming an investment decision solely on that information (Of course, anything less than this, is no analysis at all). Furthermore I don't blame anyone for giving up on Valence after reading the SEC reports and press releases. There's a lot of stocks out there, and we have limited time, so scan the info and move on if its not for us. But I would argue that usually all that information is reflected in the price of the stock, and one's chances of outperforming the market average are quite low if that's all the analysis one does. Now I realize that some investors can still outperform by utilizing some screening information and selecting a large number of stocks with certain characteristics, betting on the performance of the 'pool'. I own a value oriented mutual fund, Tweedy-Browne, that has done just that based on certain financial screening criteria.
But this is a speculative stock, and I believe requires a different approach. A more thorough analysis would include listening to conference calls, studying the competitors by reading their reports and listening to their calls, investigating the technology, studying the market and customers, reading customer comments on the new product technology and their actions to purchase it or fund it, and learning more about the large backers and shareholders. Also contacting any professional investors or analysts who follow the sector, or suppliers who might have some general knowledge of the status of the company start-up activities, or watching the progress and statements by JV partners, could be helpful. These are the kinds of activities that I believe are important to ferret out opportunities to outperform the market. Since these activities take a lot of time, the 'teaming' aspects of the internet can be helpful. For example, hypothetically, someone on this board could have contacted and stayed in touch with the ex-CEO of the company as he suffered through a serious illness in his Louisiana home (but who still held a lot of shares). Today, the CEO may be off-limits to further contact, but having the knowledge of his view of the company prior to resuming the CEO job, would be somewhat helpful in interpreting his current actions. I mention this only as an example of the more thorough research a 'team' can achieve rather than the kind of gut-wrenching name calling all too often encountered on some boards.
Even if we do all of this, we could still be wrong, so its important to spread our risk on these speculative stocks. And we should in the final analysis be reasonably skeptical about the prospects for a speculative company with no earnings, no revenues to speak of, and not even customers or a saleable product. But occasionally the risk/reward is such that one can employ strategic decision analysis and invest in enterprises with uncertain outcomes. Getting the risk/reward correct is an important part of performance, and getting this right takes a lot of analysis and work.
Regards
Dave U
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