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Strategies & Market Trends : Contrarian Investing -- Ignore unavailable to you. Want to Upgrade?

To: jsabelko who wrote (70)	9/13/2006 3:24:11 PM
From: fedman	Read Replies (1) \| Respond to of 4080

HSOA and Stocklemon. This is a tough one. I never recommend HSOA to anyone as there is this fraud cloud hanging over the stock. While I post on the HSOA board, I try never to pump this stock because management is a very tough factor to evaluate and I'd hate to have anyone lose a dollar in this name as you can't say you weren't warned big time. The punch line: I think that the HSOA management, while not the best, is not fraudulent. I think that they are growing a business and have made some blunders indicative of a management that is focused more on running a business than on stock price. I listened to the last earnings call about three times, had a few business friends go over the 10Q with me and took the plunge. It wasn't easy to do, and I wonder at the wisdom, but I'll be focused on the third quarter call and go from there. Here are some of the issues and my take on them. 1. The insider sales in the Spring. The insider sales were too large an amount of thier portfolios IMO, but the trouble is that if you decide to sell you need to sell big. I owned IIIN (Insteel) a couple of years ago and lost out when Woltz (the President) sold. I got out, with a double, but in the end it could have been a 5-10 bagger for me. I exited solely because his sale unnerved me, even though I could find nothing wrong with the company. So, I think that the insider sales were not HSOA mgt bailing before a blow up, but just poorly timed sales. I could go on and on, but it happened and you take it for what it's worth. 2. The insider stuff with AHR being a supported by HSOA and then boasting about the contract without disclosing: This is what I liked least of all. I think, in the end, it was just a bad press release. Bad in it's content and amount of Hype. I just look at it as a lack of experience. But this has me the most concerned. I am eagerly awaiting the results of their Fireline audit, as is everyone else. The other items that are mentioned, from increasing accounts receivable and booking future income don't look all that inappropriate for this type of business. It seems like HSOA is doing a good job in contracting to workers who can pay, but they are not that good at disclosing their business. The 10Q is hard to read and doesn't clearly show growth net of new acquisitions. These hedge fund guys are good, and it makes me nervous to see their short position. But HSOA has gone up to NY and Boston over the past two weeks to meet with institutional investors to try to sell the company. I've got to believe that these blunders aren't deliberate fruad, but just poor PR. And I'm glad to see HSOA putting themselves on the road and not hiding. I know that this isn't much of a compelling argument, and I'm in at an average cost of $5 a share (except for some options which I bought earlier), but I figure at this stock price, it's worth the risk. That's the bottom line. I hope this helps. Fed