Marc:
I did not listen to UTEK conference call. UTEK is my smallest position in this sector. I will review Kirk's notes from the cc when he posts them.
With that said, I wonder if anyone here would invest in a company that has mislead investors as to their earnings but for Bob Brinker's recommendation. MGJ is right to focus on the earnings credibility isssue. D. contacted their IR and was advised that they were managing for break even this quarter. I will say here that I received an unsolicited e-mail from the company that advised me of the same thing. Fortunately, I ignored it. Why? Because I looked at First Call and saw an expectation for a loss of about .07 at the time. So how come we heard of break even and management was supposedly guiding the street to a loss? I was skeptical and right. And no matter how you cut it up accounting wise, it was a huge loss. This company is one step away from a shareholder's lawsuit IMO as a result of misleading individual shareholders. Look, I know the industry has been tough but UTEK has now firmly established in my mind an arrogance towards its shareholders which are mostly individuals like you and me. Give me the bad, the good and the ugly. I can take it. And preannounce if you are going to miss estimates and don't make it difficult for me to hear the conference call Q and A. But don't cross me. I take that personally. And as a result of crossing me on the financials, why should I believe management on the feasibility of their new products? Logically, I cannot do that and I could be wrong yet nobody can call this conclusion unreasonable given management actions.
And I would be much angrier had I purchased this stock during the fall and this winter on the basis of management guidance!!! The price of UTEK got the best of me the last week of December and I traded it for about 5 points over a week. And I will tell you that management's previous actions prevented me from holding it further.
You and I have a fixed amount of money to invest at any given time and you rely upon management's guidance to make decisions. Inaccurate and misleading financial information is the stuff of penny stocks. On this basis alone, I might well be putting on my walking shoes and heading towards the exit completely. I have stayed away from SVGI becaue I did not like the management and that decision has served me well too. I have made a boatload of money more by mainly staying away from UTEK stock and trusting my instincts. The facts, as stated above, flash warning signals whether founded or unfounded by the stock's eventual performance. I think most would agree with this observation but for Bob's recommendation.
But Bob has not had any insights into UTEK's earnings potential. His earnings forecasts are just as valid as the street's on this stock. So his estimates have been off the mark as well.
And there is one more reason in my thinking to sell. His name is Percy Thomas. Let's see if anyone can figure out what I mean by this reference. See Chapter 12, Reminiscences of a Stock Operator.
In discussing this topic further -- and I write this for the benefit of others and not you -- I am hopeful that people can leave any personal slams of Brinker out of it. It is okay to discuss Bob here in the context of UTEK; however, it should be a discussion which accords Brinker respect which is the foundation of this thread.
On this topic, I think people view UTEK as the best stock recommendation Brinker has available because it is the only one that has a buy on it in his newsletter. So people pile into it hoping it is the next MSFT or VOD. I view it differently. I think Brinker considered UTEK an interesting speculation which should be accorded a risk premium of a small cap in a large cap dominated industry. It could never be the next MSFT or VOD IMO. One has to sell these stocks at the peak of the cycle or risk doing a round trip. If one does a round trip in this sector, you might as well stick to an index fund because your performance over time will be comparable to an index fund.
UTEK could do well in a recovery. Management weakness would prove secondary to a full fledged recovery. With lagging new products, it could be a late cycle capacity situation recovery much like WFR. But I have to ask myself if it is worth the hassle in my own mind to own UTEK when I have huge exposure in this sector and my picks have exceeded UTEK's performance thus far in spades. Everyone has different questions to ask themselves regarding this stock based upon their own exposure to the sector and their thinking. |
