Hi Maurice...
Ahhhhh...you seem to understand the problem. It is relatively easy to trade modest size, Maurice.
Raefon and I are in the same industry, and though we take differing approaches to our job (represented by our differing job functions), the net result is relatively the same.
The average price for my client's shares is below the current market (albeit at a modestly different level depending on the client, his length of time with me, and where I initiated his first purchases). I do not have a 5% position, or it would have been necessary for me to make a public filing. Relative to the size of the capitalization and the float, I have had *many* positions that were "heavier", but it is rare that I have had one with such little liquidity. Some of the reason is the relative weakness of the specialist assigned to this stock. I have written TFS about this, but it is up to them to approach the exchange in an effort to improve that situation.
Another part of the reason is the absence of institutional interest, which reasonably could have been expected to develop by now (and was actually substantially greater when I was building the position), but which hasn't ever come to pass. Regular readers of this thread know the reasons I believe that to be, so there is no point in repeating them now.
A good portion of the effort I have devoted to this thread and this stock have been directed toward an effort at *building* that liquidity, something that has been in the interest of *all* holders, whether they superciliously snipe on this thread *or* cast aspersions at my efforts.
To date, I have not succeeded to a great degree, but:
1) it hasn't been for dearth of trying, and
2) if you realistically had known about today's press release a week ahead of time, would you have guessed that 109,000 common would have traded with the stock closing about a point below last night's final price...and, in a down 70 point market?
This educational process is far from complete, and, as I indicated a couple of days ago, I now realize that I have "erred" in building this position because it continues to be questionable whether management will do what is necessary to promote the business on Wall Street. That error is separate and apart from the investment process, as I remain of the view that this investment will work very well in the fullness of time. However, I have no doubt that it could have worked *better* had there been more of an effort on the part of management to build its bridge to Wall Street over the last couple of years. The distinction between the process of erring on management "hunger" as opposed to the underlying characteristics of an investment perhaps is lost on some readers, but as a professional, TFS has taught be (no matter what the outcome) a new way to be "wrong."
After all, my efforts on behalf of my clients, myself, the company, and even to a degree this thread, could easily have proven more profitable in hundreds of other companies where management welcomed professional interest. That really hasn't ever seemed to be the case here, which was/is unfortunate.
Anyway, Wall Street relationships aren't built overnight, and though I have no doubt that TFS will attempt to build that bridge as we near the time the company will need money, it is the breadth and depth of a relationship that works, not merely one that is built on the latest underwriting fee. It is already too late to build something sturdy and meaningful for this year, but that doesn't mean that TFS shouldn't start *now* in the process. As my father used to tell me when I complained that it would take me four years to finish high school (or college, or whatever!), at the end of that four years, wouldn't I be the same age if I put in the effort or not?
Eventually, this company will either put up some good numbers (I expect that in this year's second half), or TFS will attract an unfriendly bid. The value of the company hasn't changed for 5 years, but 1998 and 1999 sales will approximate a minimum of $ 108 million and about $140 million, respectively. Earnings should be about $ .90 and $ 1.50.
So, based on the current capitalization, TFS's current value is a touch under $ 140 million, or about 1 times next years sales rate. In addition, it trades at approximately 11 times next years earnings, AND that is without the benefit of *any* financial leverage, as the company has no debt.
These are cheap benchmarks particularly compared to the averages, and unquestionably are predicated on limited promotion of the company by management and a giant "credibility" issue that hopefully is being resolved. The reasons aren't really important. But, they do spell "cheap." And, that is particularly so for the largest independent LCD manufacturer in the western world, one capable of having joint development efforts with the technological likes of National Semi and Motorola (among others).
Maurice, I am not a quitter, and I won't go down for lack of spirit and without a "fight." Until now, this stock has proven to be a disappointment, of that there is no doubt. But, I continue optimistic that the "stock" portion of the puzzle is fixable, if management does those things that are necessary to engender confidence. They can still split the stock (for the benefit of liquidity, perhaps even 5:4), they can still hire an outside PR firm, they can still meet with institutions on a regular basis (courtesy of their investment banker...when they finally *choose* an effective one), they can still do a financing in return for coverage...
...there is lots that can be done.
If it is done properly, I will become an irrelevant factor in the stock. That is what *I* wish for, and if you understand what I have written, that is what *you* should wish for, too.
Have a good evening. |
