RM:
Obviously the only parties that would benefit in a class action would be the attorneys, but it has to be a concern of theirs. Perhaps more significant would be the actions of the regulatory bodies, which could have very severe consequences for the parties involved. For that reason, I really don't think the new guys would have released any false or misleading information; and I do expect to see a profitable 1997 and YTD 1998. Furthermore, they would have to be total morons not to have already sought at least some legal advice; so I'm willing to rely on their representations. In the unlikely event these turn out to have been false, they will certainly well deserve whatever then transpires.
These guys inherited a very complicated and difficult situation and I like to think that they are doing the best they can to remedy it, put it all behind us, and let us all go forward on a positive note. I am somewhat surprised that the 1996 data was released unaudited and without comment from them. Might have been better to have waited for the final audit report and issued it with at least some commentary. Who knows? In that case they would have been accused of more delays, etc. It's a no win situation and I can appreciate their position. I don't know what I would have done under similar circumstances (and sure hope I never have to find out...)
As regards the 1996 data itself, it's really meaningless and trying to read anything into it at this point is pure speculation. It is very stale and FAMH is not the same company it was during 1996. There may well also be some strategy here. If you're going to have a bad year anyway, you want to make it as bad a year as you can. That is, as long as it is done in accordance with GAAP, you want to accrue (i.e., charge) as much expense as you can to the bad year; rather than carry it over into the new year. This is what I would have, and have, done.
So really, it's just back to waiting. From our perspective, nothing material has changed. If the subsequent data to be released next month is in line with what they have told us, we will see price appreciation, and probably significant price appreciation, and I think the sins of the past will be largely forgotten. Further, were I in their place, I would be holding any positive news until the financial statements were released, and the issue brought to a close, to ensure that the effect on share price would "stick." As long their representations are valid, we'll probably have a good little investment here and we might even start having some fun with it again.
If the data is not in line with what we have been told, than this may be something else entirely and they may face consequences far more severe than the loss of an investment. All things considered, I don't think that's likely to be the case; in fact, I will probably buy some more of this junk if it drops any further. |
