*AV* - we never shy away from negativity. We received the following letter from a lurker and are publishing it here for all to see. First, we will give our response and we have made no excuses. Apparently the trial reader did not fully understand how we go after stocks.
First, hold onto the stock since it will recover. Second, since the time frame you have spoken about, we have been in and out of WFR 2-3 times (I think two). I stand by
the decision and it will recover. However, a very critical error was made with WFR. We had a LLT on WFR at $20 which triggered a few days before. The only day that WFR traded at $18 was your first day of receiving the newsletter. It got as high as $18.38 on 9/21 and closed at $18 for the day. From there, WFR declined to its present levels on a consistent basis, with one or two days where it had a meaningless up-tick. The stock was closing lower each day.
What we have here was a misunderstanding of what our comment was abnd what we meant. I wish you would have asked us about the stock and for a clarification. We will take note of this and make sure we do a better job of explaining our duscipline and technique to new readers. We are working on a simple primer.
We never enter a stock that is in a declining pattern, we mentioned WFR was good under 18 but we also were waiting for it to hit a bottom. Looking over the daily data, and using the disciplines and strategies we follow, we would not have entered the stock until Monday October 4th, which is around when we did. I need to go back to the newsletter itself and see if any purchases were made. We have a table that shows our purchases of stocks.
We regret that you misinterpreted our comments but we still stand behind them. WFR was declining off the $20 LLT since Sept 14th and we were adjusting the BZ price downward as it was declining. It was not until Oct 1st that WFR hit its bottom, $12, which we could say was the right time to actually enter. Instead, on Monday, when it reached $11.50 and then broke above $12, we entered when it got to the
$12.50 to $13.50 range, only to see it finish the day at $15. We subsequently sold and I believe we are now in at an average price just above $13.
As far as seeing the exit signal, you are right. I reported that and chose to stay a bit longer in the stock, which is my personal perogative, which turned out to be a mistake. As a matter of fact, I personally exited WFR on 10/01 for a 7% losss and got in again subsequent to that.
You point out a very troublesome situation. Naturally, I think that every trial subscriber will subscribe and be able to keepo current on what we are doing, but that is not the case. Second, I have never consciously not answered email from here or from anyone that had a specific question (I may be late but I try to reply). So, for better or worse (worse in your case), I need to address some sort of feedback to trial subscribers if they do not continue with a subscription.
And to re-address the, what should I do question, I still say wait out the storm. I sat on $10 shares in WFR for months only to see it drop to $3.75 and then move up only to collpase to $6 early this year when the Rights offering occurred. We exercised our rights and we added shares, we averaged down, and we took this stock up to the $20 range. It was there once and it will get there again. Right now themarket is spooked because of a lie from VEBA, who owns more than 70% of the company shares.
After 3 rumors were published in a German Newspaper a few months ago about VEBA selling off their interest in WFR (which were strongly denied by the company), the VEBA-VIAG merger was announced and VEBA stated they were going to divest themselves of WFR. The market repsonded atrociously because VEBA will dictate the terms of the sale with the rest of us hung out to dry. We brought this to the attention of our readers and cautioned them what some of the implications could be. The following story appeared on 9/27 and would not have been in the last issue you received.
Monday September 27, 7:04 am Eastern Time
Memc Majority Shareholder Veba to Merge With Viag
New Company to Focus on Core Businesses
ST. PETERS, MO--(BUSINESS WIRE)--September 27, 1999-- Divestitures of Certain Non-Core Businesses
VEBA AG, the majority shareholder of MEMC Electronic Materials, Inc. (NYSE: WFR - news), today announced a merger with VIAG AG.
The combined VEBA/VIAG group has stated in a press release today that its core businesses will be energy and specialty chemicals. The new company's intention is to systematically and optimally divest certain non-core businesses, including MEMC. MEMC intends to work closely with VEBA to effectuate an orderly divestiture process that preserves and optimizes the value of MEMC.
MEMC is a leading global producer of silicon wafers. The silicon wafer is the fundamental building block of semiconductors, which, in turn, are found in every type of microelectronics application, including computer systems, telecommunications equipment, automobiles, consumer
electronics products, industrial automation and control systems.
The stock opened at $16.44 and closed at $14.19 that day. It has closed at $16.13 on the prior Friday afternoon. This was an unexpected knife in the chest to many of the minority shareholders and we knew it would spark volatility.
So, I do not know really what to say, except that continuity of the newsletter was not there for you to see everything that was going on. I can't Monday Morning quarterback on this stock and say that, on the news, you could have exited at a minor loss and wait for the dust to clear. I can go back to that issue and the issues since and cull out all of the discussions we had on this subject.
As I stated before, my perosnal shares are at $13.06 and I intend to average down with more shares as soon as I feel a bottom has been reached. Who knows, we might even get another pop like on the 4th of October when the stock was up $3 for the day. As far as a target price is concerned, I think $24-$28 is still doable within the next year, IF Veba doesn't screw us over and dump WFR on someone. We hope Veba has enough integrity to find a proper buyer who is willing to pay a respectable price and allows us to trade our shares in for shares in the new company.
Andrew
Andrew,
I saw on Stock Swap that you have 300% gain in this year. That is very impressive. You also said that there is not
a single customer to complain yet. If somebody has to start,
I do not mind to be the first one. Well, actually I am not sure if I can be counted as a "customer" since I only got 1-week subscription for free from 9/21-9/27.
You were promoting WFR heavily. At least twice you listed WFR as Priority of the day stock, and said that at under 18 it is a bargain. I got 850 shares just above 17 and thought I did a good trade.
It immediately tanked. Now sitting at 11-12 range and looks like going further, what should I do?
The funny thing is that you post something on Stock Swap later saying that you saw the exit signal but choose to stay. That is not fair, since you stated in your Radarview as if it is a good deal to buy under 18, rather than just hold if already have a position.
You also have my permission to publish this letter if you choose to, but please do not publish my name and email address. I am a lurker of SI.
Hope you success in your newsletter but I am not convinced to pay for it yet, based on the recommendation I saw. You may have some good calls but I am the unlucky one. |
