Paul, the one thing that has always impressed me about your posts is the polite and constructive manner with which you communicate to other Board members. IMO you don’t get personal, you just express your opinion and provide information, as is your right. This is contrary to other recent contributors who insist on making snide remarks without identifying the individual they are targeting.
I’m sure, when you wrote your comments to me, you must have thought it unlikely that I wouldn’t reply ! In this instance, I believe a reply is necessary.
(i) You may recall, that in my original Message I said, "Medium to longer term investors may want to KEEP AN EYE ON THEM."
(ii) In the following Message I said, "I believe their current fundamentals are still fine, and GOOD FUTURE RESULTS, with above average increases in EPS, could bring those P/E ratios down and probably MAKE THEM ATTRACTIVE to informed investors."
(iii) As I stated, in my Message to Spekulatius (22853), a component of my investment strategy can be read in the comment I made then, that "(We) generally only PURCHASE or SELL our shares AFTER a company publishes its financial statements because that’s when you know most about a company’s financial status."
From (i) and (ii) I’d like to think that what should be clear to the reader is my intention to bring several stocks to his/her attention (‘may want to keep an eye on them’) and to assess their future fundamental quality (‘good future results’) before making a buy decision. Unfortunately, what the reader would not have known at the time, was that component of my investment strategy which appears in (iii), and which states that I prefer to only buy or sell shares immediately after the publication of a company’s financial results. I stated at the time that several of the stocks had, in my opinion, slightly high P/E’s, and it would have been prudent to see what their next EPS’s looked like as this could have brought that ratio down and probably have made them more attractive.
In my opinion, the investment time horizons for Fundamental Analysts are not hours or days, as they are for Day Traders and possibly Swing Traders etc ..., but rather several months or years. From the 7/11/2005 to today isn’t, in my opinion, a long time in the arena of Fundamental Analysis. Personally, I don’t believe too much attention should be given to short term share price movements, as a stock’s price tends to reflect a company’s underlying fundamental quality over the medium to longer term, especially if it’s concurrent financial results continue to reflect this quality.
This is one of the reasons I put charts of 3 South African stocks, DAW, DGC and WBO on my web site. There have been several occasions of selling pressure in each one which caused sideways or slight declines in their price movements. However, the underlying quality of their financial fundamentals are still good and satisfy the specific criteria we require of a stock. As a result their overall average share prices have gone up 123% in the last 15 months (100%, 149% and 121% respectively).
One of the aspects of Technical Analysis that I’m prepared to go along with is the Trend Line. I believe there’s something to be said for "higher highs and higher lows".
With regard to the specific stocks ...
At the time, AOB was the best price performer. Since then, as you quite rightly pointed out, it’s price has fallen a fair way. But behind that fall is a reason which obviously wasn’t apparent at the time. Below is an extract which should go some way to explain that reason. Personally, I don’t believe it alters the quality of AOB’s financial fundamentals as they were in early November :-
"HONG KONG--(BUSINESS WIRE)--Nov. 23, 2005--American Oriental Bioengineering Inc. (AMEX: AOB - News), a leading Chinese manufacturer and distributor of pharmaceutical and nutraceutical products, announced today that it is conducting a private offering to accredited investors with respect to an offering of up to 12,500,000 units, each unit consisting of one share of its common stock and three-tenths of a warrant to purchase one share of its common stock, at a price of $4.80 per unit, for anticipated aggregate proceeds of up to approximately $60 million. The proceeds, net of offering fees and expenses, will be used to finance acquisitions and for general corporate purposes " ..... and ....
"Each unit consists of one common share and three-tenths of a warrant to purchase one share. After accounting for the warrant conversion, American Oriental Bioengineering will be issuing 17.4 million common shares.
The news sent the company's shares down 95 cents, or 16 percent, to $5.02 on the American Stock Exchange. The stock has traded between $1.75 and $7.68 over the past 52 weeks."
You correctly stated that SCHK’s current price is $33.25, but that you couldn’t find anything on Yahoo as to it’s price on 7/11/2005. For those who are not aware of it, the web site, www.bigcharts.com, is an excellent one for looking up past stock prices. I use the Java chart facility in this regard. On the 7/11/2005, SCHK’s closing price was 12.3% lower at $29.60.
Yes, I would still offer HANS and PDX as Value picks based on their most recent set of financial results. Needless to say, based on (iii) above, I could change that opinion after their next set of published results. So I agree, ... for the present, let’s move on !
Now that I’ve been made aware of that "unwritten rule on the thread" (unfortunately I haven’t been around on this Board long enough to have picked up several aspects of Board etiquette) I’ll be sure to monitor my number of individual stock references !
P.S. I hope Madharry wasn’t too put out by my Message 22885. It was meant as a "tongue in cheek" comment, which was why I put the "{:-)" at the end of it ! After all, let’s not take life too seriously. Apart from the "serious" business of stock analysis, I believe we are meant to have a bit of fun as well !
Best wishes with your investments in 2006. |
