Hi D Floyd...
You know, it is very difficult to read the tea leaves in this stock. The recent decline (which realistically wasn't out of bounds for the market reaction of the week) is perhaps understandable, but the lack of bids on the dips is less so.
Everyone that has a rooting interest in the stock and that reports in here has heard basically the same story from management, things are on track, we are happy with the "progress," etc. And, the evidence to that effect is unified and cogent: Management has planned for the future by establishing a Chinese facility, it is up and operational on a timely basis, and despite this capacity increment, additional funds are being spent to expand production in Manila and Arizona as well.
So, management is planning for *tons* of revenue growth. Aside from the fact that there will be a ramp in productivity (and thus margins) in China throughout the year, there is no reason to assume that business will not show dramatic earnings gains throughout the balance of the year. In addition, I find it hard to believe that David Buchanan would leave his operational responsibilities at a time when it wasn't *clear* that the company was on the right track...and with nary a hiccup in sight.
I can't recall who said it, but some wag once opined that the stock market has predicted nine of the last five recessions. There is an ebb and flow to prices, and perhaps TFS has come down because of some overmargined investor, or any other of a number of reasons.
For myself and my clients, I regret that the product pushouts of the fourth and first quarter cost us significant momentum in the stock, and because of the limited PR effort the company puts out, any hiatus in "news" gives rise to periods where the shares are so inactive that a normal seller can't unload even a small position without having an untoward reaction in the market.
Moreover, it is very unfortunate, I think, that senior management thinks of its responsibility to promote the interest of the shareholders as a chore, which is patently obvious in virtually all communications with the firm. One can never say that the people at TFS are "impolite", but it is easy enough to see that the company hasn't ever desired a substantive shareholder relations effort.
This is indeed unfortunate, because as has been well documented by others on these pages, there are many other TFS competitors that garner large market valuations on a couple of development contracts and the *hope* of producing sales and income somewhere down the pike. If the people at TFS were truly competitive, this would gall *them* as much as it does the shareholders, as each of us has watched an entire, substantive, bull market pass without even a "smidgen" of profit participation. In fact, TFS shares now fetch a lower price than a year ago, just prior to David Buchanan's CNBC interview following a 13 cent quarter.
So, for the shareholders another year has passed of "always jam tomorrow but never jam today," and not all that much has changed at TFS. The company is still profoundly secretive, and though there are "rumors" in the marketplace of further production pushouts (which are impossible for an outsider to gauge, not answered by management when the question is put directly and pointedly, etc.), as has been the case before, the only time the holders will "know" is in retrospect.
In my view, this is inherently dishonest for a public company, particularly when there is limited written information available from the analytic community. In short, there is one recap per quarter...and if you listen to the conference call you better hope that there is no alteration of that view through the quarter, for it there is you haven't a snowball's chance in hell to prepare for it.
Matter of fact, the "Street" doesn't seem very prepared most of the time, too. Management still hasn't apparently figured out that a policy of openess...answering all but the most intrusive questions...is the best policy. When things are going well, at least the shareholders believe that is the case. As things stand now, every substantial shareholder would welcome a bid for the company in the hope that this will improve the liquidity of his investment. It is too bad...but the stock price *always* seems to discount the worst possible outcome. Perhaps the collective investment community only sees that side of the story.
Anyway, I continue frustrated, as are most of the others that have found this story either because of me or prior to my entry. Honestly, in my view it is doubtful that based on personality issues, this company will ever have a reasonable degree of self promotion. Shareholders should be offended that Kopin and the others trade at such a large premium to our own equity valuation. So should management, of course, particularly when low market valuations affect the company's ability to do acquisitions at reasonable cost, or even do financings that are non dilutive to shareholders.
It is beginning to appear that this "investment" will be closed out by my heirs. And, that is hard to tolerate when one considers that I am only 50.
Have a good evening. |
