GREY:MYLGF - Post by User
Comment by
RetailRubeon Mar 23, 2010 9:01pm
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Post# 16916338
RE: Value Buy
RE: Value BuyI keep looking at this to invest in but it makes me nervous.
Two analysts rate it a strong buy. If anyone knows who the analysts are, or can provide me with the logic for their recommendation, I would be interested in reading it.
Generally, I don't trust analysts' ratings. Here's my experience with analysts: They hang around companies that will need to raise money soon, hoping their firm can get the investment banking business. Their rating on speculative stocks is almost always "strong buy". Then when anything goes wrong, they cease coverage rather than say "sell". They disappear like old snow on a warm spring day ... very quietly. For example, look at MS. MS has tons of cash, one new project, selling at a big discount to book value and all three analysts are saying sell. Then look at BNC, which has very good potential, results imminent, doesn't need cash: only one analyst. The second one disappeared.
MYG will need cash very soon. Latest financial statements are dated Sept 30, 2009. At that point they had cash minus payables of $15 million. But they seem to burn $5 million per quarter. At that rate, they will be insolvent by June 30 2010. (These are very rough numbers. I am waiting for Dec 31, 2009 financials which by law must be published by March 30, 2010. Then I will decide what to do.)
Finally, how do you raise cash without much dilution if your stock is 23 cents? You would have to give the buyer a discount to current market price to bring them in.
So be careful when your investment rationale is the company is selling at a discount to book value.