Dennis,
<Will the stock continue to sink until buy back begins,>
This is exactly what I predicted 3 days ago. Unfortunately, so far I have been correct. WS hates uncertainty more than ANYTHING. CREAF has not delivered on its promise to begin buying back shares "immediately" after receiving shareholder approval. In addition, WS wasn't even a little impressed with the dividend announcement.
This is how I see things
1) CREAF will NOT buy back near the full (10%) amount this year. Ask yourself this: if there was even a remote chance of CREAF buying more than 9 million shares over less than six weeks, don't you think at least some big blocks would be getting bought by institutions. I saw one big block today (50,000) on a down tick.
2) CREAF's credibility problem on WS continues to get worse, not better. IMO, the dividend announcement wreaks of desperation. It's almost like a bribe to please don't dump the stock if it should happen to go up because of the buyback.
3) Most technologies stocks have been outperforming over the last few days. We are due for a correction in the tech stocks. Do you think CREAF will be able to go counter to this trend?
4) Same thing regarding the Fed. If the Fed doesn't cut rates next week, the market will correct, probably significantly. Do you think CREAF will buck this trend??
5) I do think that the buyback will eventually help boost the stock some. The problem is that this will likely come from a base in the low teens and might not even get us back to last week's high of 16.
6) There is a lot of talk about the stock shooting into the 20's when the buyback starts. I find this very unlikely (although I would love to see it). People have even gone as far as to imply that such a huge rise is a no brainer. Well, if it's such a no brainer why has there been virtually no support at these levels and why are there no signs of accumulation.
This stock continues to be out of favor. Sim still hasn't learned how costly it is to build up expectations (i.e. wowing announcements, immediate buy back) and not deliver. WS is skeptical and rightfully so. All investor focus on the business has been lost. All we hear about is dividends and buybacks. Product news and financials are hardly being discussed anymore.
Perhaps I am being overly pessimistic but with so much "good" news out there one has to wonder why the stock is performing so poorly over the last few days, especially considering that most of us consider it terribly undervalued regardless of a buy back or dividend.
I hope I am totally wrong, but I think appreciation and acceptance of this stock is going to continue to be a very slow incremental process.
If it dips down to the <13 range I will pick up some more for trading purposes.
FF |
