Of course this view assumes Zicam isn't a "cure" for the common cold. The reason I don't believe it's a cure is because if it were the inventors would be much better off cutting a deal with someone credible (ie known and trusted by the consumer) who has the resources to put the product on shelves and get consumers attention gaining market share.
Mad2, I have owned this stock for two years. I have been long and short against the box on several occasions. This is not about emotions. I have read the balance sheet and studied the 10Q feverishly. I have been to the company and spent hours with management there and on the phone. I watched Kern almost take the company down and Gary right it back up. I think, I know enough about this company that I don't need you or Bengalus to tell me the company has problems. For each problem you offer, I can offer you an advantage. The bottom line is that they have resurrected this company and are leaning forward in the foxhole. The momentum is in their favor and you are having trouble understanding this.
Dan did a better job than I could explaining valuation so I will stick with his explanation, which I agree with wholeheartedly. You ask where they will get the resources to market Zicam. I will trust that Gary has that one worked out but I suspect it has something to do with the fact that 75% of his non-Zicam revenue will come from private label manufacturing which has little costs associated once the contracts are in place. This will begin to create a cash flow that will allow them to market their proprietary products. While they may require a bridge loan to tide them, I don't see this as one of the greater hurdles Gary has had to take.
I think they are poised to go higher. It may take a week or ten weeks, I don't really care. Of this I am sure, at $10, the shorts have less to gain than do longs. I am sure of another thing, I would not want to be short this stock except with your money. The float is too small and there are too many shares short already. There is a rumor, that Watson Pharmaceutical is contemplating purchase of this company. I don't know if there is any validity to it. But I believe one or two downside points is pretty small gain for the potential upside.
Now I will address your comments above. Skepticism is a healthy thing. Betting against the trend is yet another thing. You don't believe that GUMM has the cure to the common cold, albeit there is some evidence to the contrary. You base that on the belief that the inventors would go to someone "credible" with the resources to get it on the shelf. That totally discounts the entrepreneurial spirit. What is it that the inventors have missed out on, here? They jointly developed a product which is now arriving on the shelves of several chain stores and own 40% of the venture. They will become (if they aren't already) multi-millionaires this year. It will only get better. You can call this what you want: "Dancing with the guy who "brung" you, a match of entrepreneurial spirits, or working with someone willing to give it a shot, etc.
Mad2, some of your comments suggest that you are reasonably sharp, I do not understand playing "russian roulette" with this stock.
I wish you luck.
Mike |
