Titan has simply been atrocious in the past six trading days, absolutely falling off a cliff with seemingly no bottom in site. What the heck is going on here?- like you, I am concerned with the free fall. This thing is really bothering me.
I hope you are reading all of the commentary- not just some of it. Now is a good time to draw your attention to my warning that these kinds of things would happen in this nasty market environment.
I refer back to the November 10th edition, entitled “WOW”. This was a huge down day in the markets:the turning point which kicked off the sub-prime meltdown.
In that edition I talked about the importance of sticking with your SSLs (suggested stop loss) in a down market depending on your personal preference. To me, it is simple. If you hold the stock below either my SSL or your own personal SSL, you have decided to become a Warren Buffet like long term investor.
In conjunction with that edition, I updated all the SSLs at www.otcjournal.com, and set the SSL for TTGL at $1.73. Today, TTGL closed at $1.18- far below the SSL.
If you really are a long term investor, this should not concern you. You should only be concerned with fundamentals. If you are not long term and worried about the drop, you should have been out. If you got out, you should be looking to get back in.
I believe the problem here is simple- TTGL is evolving from a small following of retail investors to an institutional story, and the company has not been effective, or not tried to be effective at getting its message out to an institutional audience.
This down market has led to selling pressure and a vacuum of buying- now I believe the stock is being knocked down by tax selling. The real problem- no buyers.
Here’s a fact- this company made $9 million in positive cash flow last fiscal year- earnings are just an accountant’s opinion; cash flow is a fact.
Here’s another fact- this company should deliver over $700 million in revs this fiscal year, and it is trading at a market value of $64 million- ouch!!!!!!
Let’s look at a longer term chart, and you’ll see my reason for concern:
This chart tracks the stock on a weekly basis since the company embarked on its ambitious growth path. As you can see, it’s hasn’t been straight up the whole way.
After delivering splendid price appreciating in 2006, the stock took a breather in the first half of ’07 before making its next leg up. Throughout that entire time, there was never a sell off as vicious as this one.
On the other side, the left leg up was steeper than the past rise, so there could be an equal but opposite reaction.
I don’t believe we have another CPNE here (if you followed that one) as this company has a much solider business model and adds real value to its customers. This one is not a house of cards.
In light of the new volatility, this could prove to be a great January effect stock as soon as the tax selling abates.
There’s another possibility that is unique to TTGL. Those of you who have really dug into the details know this company’s financial statement continues to be plagued by ghosts of past loan sharks. There are warrants. Some of these funds are under very heavy pressure these days, and there could be a renegade former financier with a need for “cash at any cost”. Just a thought. Their weakness could be our opportunity.
My initial thought- don’t touch this stock now. Wait for the selling to be over. Then, buy this stock towards the end of next week after all the tax sellers have finished doing their damage if it stabilizes. This one could rebound beautifully after we get past next week. Just a guess, but I wouldn’t be surprised to see them announce a restart of their stock buy back program.
Comments and questions are welcome.