It always amazes me how the market can't see out more than 6 months.
Last spring/summer AMD had a market cap of $2.5B while it had $1.0B in cash and a brand new fab that cost $2.5B. Last February, the market was pricing Intel at 50, only eight times Intel's eventual 96 earnings. The market couldn't see one year out, not even close! Both stocks tripled off their lows. Everyone seems to be chasing the latest Q earnings, which is really almost unpredictable versus consensus estimates.
So here we have a stock that is busily putting in place the backbone of the financial clearing system for the future, and all anyone can see is that it costs money. Its also a low margin business.
But so far, there really isn't significant competition. The margin may be low, but the business volume could be incredible. I really don't think the investment community is willing to even look one year out, so asking them to look two years out, just isn't going to work. If a money manager doesn't have a good quarter, then he's gone long before two years come.
In a way this creates opportunity for long term investors who conserve their resources and spend their time and energy looking 2-5 years out. If we have conviction and perseverance, we can gradually accumulate a position at very reasonable prices. If CKFR stays at this level for much longer, I will begin adding to the position I started in November, and keep adding until I hit my next commitment level.
Paul |
