Editor: Very good. Wrote some brief comments. More over the weekend when I have the time. Unfortunate they didn’t get rolling fast enough to deliver this in the bull market. Stock might have been $7 or $8. 

Editor: Might have to start publishing some content on that one again. They are in a bad space, but a pretty darn good company. Now that the stock is completely blown up, it could start to trade much better.

Editor: No, was thinking of doing a BLOG update on it in short order. Technically, I don’t see anything too exciting going on here. The problem is the sector- they depend on the North American consumer for sales, and right now that’s a bad place to be. However, the numbers are getting much better, so someday this one is going to wake up.

Editor: There has always been a lot of chatter about Kodak buying the company out eventually, which is why a lot of people believe they pay no attention to “spreading the word” to the financial community on the company.  Is it worth a double? easily. The stock is absurdly oversold, and just like CGYV has been the victim of forced, irrational selling from hedge funds. Remember the $15 million deal they did at $2.40? There were about 10 different funds involved in that deal, and I’ll be at least half of them are either now completely liquidating their portfolios if not closing their doors. This will end up being a lifetime buying opportunity, I just can’t say when the carnage will end and the turn will come. I have been advising no long positions without a 6 month window in time.

Mike: There’s the big question of the day. How could PNWIF- along with many other issues, trade to these absurd lows? Here’s your answer. The funds that participated in the $15 million financing are responsible. Just so you understand- here’s what’s happening out there. Many of the smaller funds are raising cash at any cost. It has nothing to do with value or upside. They are just selling indiscriminately because their investors are demanding redemptions. It’s cash at any cost, and it is creating absurdly low valuations and ridiculously oversold stocks. In fact, I have actually read some apology notes from fund managers to the Investment Banker on the CGYV idea- they are actually apologizing for having to sell. It is out of their control. It reminds me of the Dot Com demise in 2000 when many dot coms actually traded below what they actually had in cash in the bank. The good ones came back, and investors who bought those absurd valuations made a fortune. We are now moving through the process of battering these things into oblivion, and at some point they will start coming back to reasonable level. If you haven’t sold, a little patience might pay off. Their business is very robust. If you have some additional capital, you might want to add to the position by the end of this month. My money is going into CGYV- two big differences- CGYV is making more money, and CGYV’s business is not directly tied to the American consumer. However, I believe they are both trading a great valuations to make money.

Editor: yes, I have spoken with them. I am still expecting the next two quarters to show massive improvement and I expect the company to be cash flow positive on a permanent go forward basis. However, I believe there are two main issues effecting the stock. One- funds who put the $15 million in at $2.30 have probably been under a lot of pressure. Two- the CEO indicated their expenses would stay a bit higher than the market would like. I think the stock is worth a double from here, but it might take six months to get there. 

Editor: Probably funds having to sell to meet redemptions.

Editor: I thought the last quarterly numbers were pretty good, and the outlook seemed strong. Of course, their fortunes are tied to US consumers, so that’s a big minus. I would guess a bunch of the funds in the stock are getting hit with redemptions, forcing sellers who don’t really want to be sellers. It’s a sign of closing in on a bottom- when funds are forced to sell who don’t want to.

Editor: Probably the funds who were in the financing getting hammered with redemptions, which puts pressure on the stock.

Editor: I would love to see their shareholder communications improve. It has been abysmal to this point. I am optimistic that might be the case, as Fitzgerald indicated they would be hiring a new CEO- hopefully, that CEO will change the policy of communicating with the markets. The conference call they held was also a positive sign. It was the first in their history. On the minus sign, if they don’t improve their policy, and continue on their current course, we won’t get any numbers out of the company until the end of January, which could sabotage their opportunity to move up during what could be a time of the year when stocks start to trade better. We’ll see. The numbers should be absolutely fantastic between now and the end of the year.