I just posted this on the yahoo board. May be I should post it on the AoI thread since I talk about market dynamics here (though nothing earth shattering), but somehow I think it is more appropriate here.
ST
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<<1) The company received proceeds greater than the current market value of the stock. Since
the objective of any company is to increase shareholder value, it hasn't yet achieved that
objective.>>
This I do not agree with. Your decision to buy, hold, or sell, should be independent of how much
you paid for the stock. The past matters only in as much as it can bear on the future. For a
today's investor, the company is a real bargain exactly for the above reason. As someone who
recently bought equity in the company (and please do not take this the wrong way) I am
delighted that I am buying a company at 11 who managed to sell shares to the public at 23. That
in itself is creating value for me (all other things being equal). In short, I believe that the
company is creating excellent shareholder value for all its recent shareholders. BTW I don't
think there are many 25+ shareholders left.
<<2) Investors with a basis of $20+ a share have a markedly different mindset than those with
a $10-$15 basis. The fact that there are investors in the stock at such high prices creates a
dynamic that can't be ignored.>>
Here we are in perfect agreement. My take is that this mindset can only work in the favor of the
stock performance. Let's face it, anyone who held the stock from 20+ all the way down to 8, is
not going to sell it at 11 just because if pulled back from 13. Look at the volume on days like
this; very few sellers. That means that anyone who wanted to sell has already sold. Some day
the shorts will understand how the longs felt on the way down. BTW ask Pat, I told him long
time ago that so long as the then current shareholders were in the stock, TDFX had no upside
potential and that we need a bad news to get them out and get the stock going up. I am not
surprised one bit that we are doing better now after the bad news than we were before it.
Cheers,
Sun Tzu |
