The exact bottom is impossible to predict. But I think that by buying at current prices, the long-term investor will look back a year or two from now and see that the stock had, in fact bottomed out. The bad news is now factored into the stock price: depressed prices, product oversupplies, shareholder lawsuits, failed buyout, balance sheet problems, integration problems, computer upgrade issues, management shakeup, ect. New buyers of the stock are under no hyped-up illusions of short term gains. It takes guts to buy when everything looks so bad, but this is when the long-term money is to be made.
I remember buying Chase Manhattan stock at $10- a share years ago. The US banks were at an absolute low and you could not find a single soul who would speak well of them (my own basis in the stock at the time was $44- per share--I had lost over 75% on paper). But I knew that in 3-5 years, the US economy would turn around. I was also confident that management, who had made some incredibly bad lending decisions, was learning from its mistakes.
There is no question that ABTX management had made some serious PR blunders. But it looks to me now that they are learning from their mistakes. More importantly, the company's long-term business plan is being followed to the letter. There will be more bumps in the road. But I am confident that the worst is behind us. |
