Hi Tom- I guess I have 4 local stories: CTAL, EGRP, LOGC and PGEX:
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- CTAL is a rags-to-riches story of a chemical research company that specializes in research in catalysis. They finally bought a significant pharmaceuticals production facility and overnite grew from a company of 100 to a company of 1,100. Now, after 20 some-odd years of losses, they turned a profit.
Last week CTAL announced an agreement with GE to supply emissions control devices for GE's natural gas turbines. They've been stalking this one for years. The company is filled with technology ideas that are anything but semis and biotech in a valley that knows nothing else. All of them have great profit potential, like gas to liquids for turning natural gas into a gasoline substitute.
Unfortunately, something ugly just landed in the CTAL punch bowl: I just read the quarterly and see that accounts receivable have doubled from 14M to 28M. If you've read the Motley Fool Investment Guide, you know that's a potentially bad sign.
Btw, the co-founder of CTAL is Jim Cusamano. In a former life he was Gino Cusamano of the Royal Teens. Remember "She Wore Short Shorts"? That was Jim singing the lead. He decided he had to choose between a career in rock & roll and something else. "Something else" turned out to be a PhD in chemistry.
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- EGRP is the brainchild of a local guy. I first read the story in '96 in the local paper, then later heard they'd gone public. None of that convinced me to invest even though the concept appealed greatly. I was more interested as a place to trade. It was talking to a brand new employee at EGRP that did the trick: I've never met anyone so enthused about his new job. I figured any business that can make an employee feel that good about where they work has to be a company to invest in. Turns out (at least this time) that it was a good calibration.
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- I first heard about LOGC in 6/95 when Dorfman did a 2 minute spot on them. The stock nearly doubled in the next 15 minutes then moved on up to a high of 14-1/2 before sliding to 2-. Never thought much about it after the Dorfman story until I met the CEO/founder. He gave me a 4 minute synopsis of the plans for the company which was straight out of the annual report. Later I was doing a Prosearch (a Telescan service) looking for insider buying. Found out the guy I'd been talking to, Bill Volz, was buying LOGC stock at every opportunity once it hit 2-. Hmmm. 2- was so cheap I couldn't pass it up; I bought some. A few months later it doubled and then it headed back to 2-. Good AIM stuff, but unfortunately the cycles are slow.
What I've learned in the interim is that LOGC has 2 niche markets: in addition to all the usual Silicon Valley semi-fab stuff, they're selling specialty silicon to European broadcast markets. Europe is years ahead of us in HDTV and LOGC is a popular supplier. The other market is high-reliability parts for the military and aerospace markets.
I saw Bill last Sunday at the SJ airport and we talked again for a few minutes. I said something about the popularity of SRAM based on computer sales ads and remarked that semis ought to be doing better than the doom & gloom-ers would suggest. I got an 8 second lesson in the inverse relationship between semiconductor sales and computer sales: if the computer manufacturers love it, it's cheap and the supply market is glutted. Hmmm. OK. I recently checked the Insider report on LOGC and see that when LOGC hit 1-3/8, Bill bought over 200,000 shares and another officer bought a bunch as well. Looks like I'm going to have to be patient on this one, but I feel like it could pay off eventually. Thanks to AIM and the 2 rallies LOGC has had, I now have more than double the number of shares I started with.
Another "btw": Bill Volz went to work for Texas Instruments in Dallas when he first graduated from college. A few years later they sent him to a TI facility in Silicon Valley to help solve a production problem with a promise to return him after 18 months. When they wouldn't, he quit and founded LOGC with 3 associates. Sorry TI; better luck next time.
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- PGEX came about when someone heard from me what makes a good AIM stock and mentioned I should look at the PGEX chart. I did and thought the chart looked ideal for AIM. I checked Yahoo! and saw they were making some $$$ buying transoceanic fibers and selling bandwidth to companies like Sprint and WCOM with partnerships with companies like AT&T. I thought it had promise so I bought some.
My timing for buying PGEX was out of complete ignorance for then current events. Earnings were due, but the CEO was in Europe and wanted to delay the announcement until he got back because it was going to be good news. The delay was taken as a negative sign and price dropped down below 30. The CEO got back to the US and they made the announcement: surprise earnings increase. Boom! Up it goes. Beyond that very fortunate initial buy I know nothing except what's in the Yahoo! Profile report: dumb luck for timing and a great suggestion by a friend. Now I've got to start digging a little to see what else is going on at PGEX.
One last "btw". I got a call Saturday from NZ. The sound quality could easily convince a person they were talking to someone in the next room, not 8,500 miles away. It's amazing what has happened with at least some transcontinental communications. My most recent conversations with the UK haven't been of this quality.
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Don't know if any of this helps since it's so unstructured in terms of discovery, but so far it's (sort of) proven Peter Lynch to be right. The only company whose stock I own that isn't local is OMQP and it was info from Tom that got me interested.
Bruce |
