PINK SHEET
PJC
I sold my entire position of PJC this morning. The stock has been in a downward trend, in a rather listless trading for a while, before its earning release on next Tuesday. I have suffered sufficiently to know that its earning results probably will not be inspiring, and the reactions thereafter will likely lukewarm the best. A downward jerking reaction is a distinct possibility. Therefore, I decide to step aside from here. If the earning is neutral, I believe I can re-take the position. If the earning exceeds, I will wait for the weakness to get in. It generates about 10% in about couple of months. I am not unhappy.
KEGS
This is a very interesting situation. KEGS is delisted by NYSE for not filing its Qs and Ks on a timely manner and it will start to trade on pink sheet today. Normally I would not touch a stock with “accounting irregularities�, “fraud�, or “restatement� etc. However, in this case, things appear to unfold in a orderly manner. Management changed, filings are expected in next few months, waivers from lenders obtained, and pink sheet stated. But more importantly, the company’s fundamentals remain strong now and going forward. Restatements are about the past, not the future! Not surprisingly, it is knocked down to a level where valuation is rather cheap. (14X EPS06, 6.5XEBITDA05, and 6XEBITDA06). I am surprised that it has been knocked down further given potential for insolvency (it breaches financial covenants of itd debt instruments). It is risky, but worthy it.
I sold my entire position of PJC this morning. The stock has been in a downward trend, in a rather listless trading for a while, before its earning release on next Tuesday. I have suffered sufficiently to know that its earning results probably will not be inspiring, and the reactions thereafter will likely lukewarm the best. A downward jerking reaction is a distinct possibility. Therefore, I decide to step aside from here. If the earning is neutral, I believe I can re-take the position. If the earning exceeds, I will wait for the weakness to get in. It generates about 10% in about couple of months. I am not unhappy.
KEGS
This is a very interesting situation. KEGS is delisted by NYSE for not filing its Qs and Ks on a timely manner and it will start to trade on pink sheet today. Normally I would not touch a stock with “accounting irregularities�, “fraud�, or “restatement� etc. However, in this case, things appear to unfold in a orderly manner. Management changed, filings are expected in next few months, waivers from lenders obtained, and pink sheet stated. But more importantly, the company’s fundamentals remain strong now and going forward. Restatements are about the past, not the future! Not surprisingly, it is knocked down to a level where valuation is rather cheap. (14X EPS06, 6.5XEBITDA05, and 6XEBITDA06). I am surprised that it has been knocked down further given potential for insolvency (it breaches financial covenants of itd debt instruments). It is risky, but worthy it.
posted by ZIGZAG at 4/08/2005 01:20:00 PM
0 Comments:
Post a Comment
<< Home