RE:RE:RE:RE:And we're up !Graham's basic thesis was that a stock's price will always return to at least book value, so if you bought below book, you will eventually get a gain, although not necessarily through the market, which could be irrational for long periods of time and often is. You had to be prepared to ignore the market. If the market ultimately refused to recognize at least book, then the company would become the subject of a takeover and go private at at least that value. This is an oversimplification of the theory, but it presents it in a nutshell. It was designed for long positions. It ignored what the market was doing at any given day, and was not an appropriate strategy for the day-traders who have been dominating this stock over the last little while.
If you apply Graham's approach to Concordia's balance sheet, it appears to be a fabulous buy at today's prices. I mean, the market capitalization is WAY below book value. But here is the big unknown: Is the book value according to Concordia's financial statements accurate? It may be; or it may not be. It may be a little overstated; or it may be alot overstated. The Company's book value is all represented by goodwill. They took a giant write-down of that in June. Was that enough, or are there more write-downs to come? They can play with this a bit, but not too much and not for too long. Otherwise their auditors will not sign off on their financial statements.
This is the big gamble with Concordia. If it turns out that the Company's financial statements accurately reflect the value of their portfolio, and that they can in time increase the value of that portfolio through new product releases (as they have claimed are in the works), people who bought at the current low prices are going to make alot of money. If, however, it turns out that more write-downs are necessary, and they cannot rebuild, people who bought even at the current low prices will be screwed. People who bought way back when it was $110, or even when it was still $50, $40 or $30, are screwed either way, if any of them are still holders.
So this is not a stock for the faint of heart. And no one should be playing it with money that they cannot afford to lose.
One last thing: Nobody knows for sure, but my expectation is that the financial statements to be released in March for the year end will not be good. My reasoning is that the new CEO will use the year end to clean out any asset values that have not been fully sanitized by the Company already, so that later write-downs are not blamed on him. He started a month and a half before the year end. Nobody is going to blame the year, or even the last quarter, on him. But going forward it will be all his. So he will want to start with at least a fair presentation, if not a overly conservative one. That way the credit for any improvements will go to him. If there is nothing or at least very little more for him to clean off, that will auger very well for people long on this stock, and we will see an instant rise. If there is alot more to write off, there will be a sudden dip. But it may take a least another quarter for it to become clear what is really going on. Past management were a bunch of untrustworthy thieves, but I, personally, do not think that the current CEO is playing the game that way.
This is the reality, people. All the other junk that is posted on this board is just noise. If you are up for the gamble, you are best not to listen to any of it.