The volatility of this thinly traded issue will always be a problem. I do not believe it was margin selling - the stock was reaching for $5 share when the seller pounced. It could have been shorts still trying to hold it down (possible), Dreyfus still unloading (more possible), or disgruntled holders tired of waiting for news (most possible). Personally I think this focus on financing, although important as a stepping stone in the Company's growth, is way overblown on the short term. The market acts like the Company will go under if it does not get financing in the near term. That is complete hogwash. It will slow some of the more exciting corporate developments - a concern when the stock was at $12 a share - but at $4 the market has the Company priced for 0 growth for the next 3 years. These are the sort of bargains everyone looks for in down markets.
Key to the Company's future progress is management. Not everyone agrees with this (in fact no one does that I know) but I have enormous respect for Kurtzman, and he runs the show. Harry has learned some hard lessons in the last year or so. I believe he is the quality of person who will profit from his lessons. Same for Sultan - a marketing whiz who has learned that running a company involves a whole lot more than marketing. Whether Steve Veen is responsible for the Controls problems at Newcom - or whether it was simply an under-staffing problem at Aura when Newcom went public, or whether Harry just had the troops focused on development issues and not the Financial - will be debated.
But I believe management is taking these issues seriously now, and are addressing them. Witness the fact that Newcom is not doing any equity deals. Witness the fact that Aura, at some expense, converted their equity debt to straight debt (announced yesterday). Witness the fact that Newcom is installing platinum Controls program. Witness the fact that Newcom has not one but two investment bankers - Furman for equity strategies, Reidland Capital for debt strategies.
THAT is why I'm buying the stock - not because I expect to trade out of it for a point or two in a few weeks, but because both these companies are going to be major players in their fields within the next few years. So do I care who was selling yesterday? Not much. |
