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Did you guys see this update?:
http://poseidon.mwnewsroom.com/Files/d2/d2f21ba6-8a95-4c11-87df-3beb0a7ba61d.pdf
When I tried to place the order electronicly I get a warning that I have to call the brokerage. Im just going to sit on them so I didnt bother calling. I think it will be fine long term.
IR just left me a voice mail I will call back when I get the chance.
buy the dead stock of co. no more on market. you may lose your as..
Yeah, it does. I was just too chicken to hang on
Yup looking better...still has massive bounce potential! I'm sitting tight!
.18 x .197, last .195. That's +.055 for the day, or +39%. Anyone who bought yesterday is looking good.
Did you try to sell? Stock looks decent today. .17 x .197.
Sounds like a possibility. Let us know what happens.
My broker has a tab to choose which market to buy or sell on, CDA or US, for duel listed stocks. Ive never used it though. Maybe Ill throw out a wild sell and see if they reject it.
Poseidon Concepts: How my promising bet went awry
David Milstead
Special to The Globe and Mail
Published Wednesday, Feb. 20 2013, 8:10 PM EST
Last updated Wednesday, Feb. 20 2013, 8:34 PM EST
I don’t always buy shares in the companies I write nice things about. Only occasionally, in fact, because of limited resources, diversification, et cetera.
But one of the ones I did buy, in early December, was Poseidon Concepts Corp. Two days after I recommended it in The Globe, I bought 1,000 shares at $3.40 apiece. That has turned out to be both embarrassing and financially painful as the stock has cratered to a quarter a share. On a percentage basis, I’ve now lost more than the holders who had bought at the 52-week high in February, then sold when the company’s first bad news hit in November.
So, let’s look back at what went wrong.
Like many journalists, I have a value bias: I like underdogs, and I like getting things at a discount. I’ve been trying to shake that in the two years I’ve been writing the Vox column, particularly since a number of my worst calls are high-priced, high-quality companies that kept rising after I said they were too expensive.
But I’m still deeply susceptible to the idea that the market can overreact to an earnings miss. Those high fliers generate such lofty expectations, and disappointments send momentum investors rushing to the exits. Good companies can have bad stocks, in the short term.
It seemed plausible that Poseidon Concepts fit that bill. By nearly all accounts, its fracking-fluid storage tanks were a technological leap forward. Its third-quarter numbers, however, were deeply disappointing. The company blamed slowing activity among its gas-drilling customers; many of the analysts who followed it said its dividend – even at a 27-per-cent yield – was sustainable.
Of course, there was one underlying assumption behind all of this: That Poseidon’s financial statements were accurate. Which, we now know, were not.
Shortly after Christmas, the company announced a new CEO, suspended its dividend, and said it was forming a special committee of its board of directors to “address various issues arising from the recent write-off of certain accounts receivable.” Shares dropped to $1.48; I was now down by more than 50 per cent.
I have another value-investor bias – or perhaps it’s a stupid-investor bias. I immediately have the urge to double down when one of my holdings drops.
This time, though, I couldn’t pull the trigger. Special committees formed around accounting issues are bad news. It seemed like the market was pricing in the risk of a restatement. Or was it?
I didn’t buy more. But I didn’t sell, either.
The restatement we’re getting – 75 per cent of 2012’s revenue wiped out – was clearly worse than the market expected, because the shares traded as low as 19 cents last Thursday before trading was halted Friday at 27 cents.
So, again, what went wrong?
One, Poseidon’s products sounded good to me, but outside of knowing the company had at least one patent, I didn’t really have a good idea of the company’s sustainable competitive advantages. Which, we now know, weren’t particularly strong. Common sense should have suggested that the sky-high operating margins Poseidon garnered in its early days would have attracted competition, and then pricing problems (something short-sellers at the firm LDIC Inc. noted early on, to their credit and profit.)
Two, I should have been more skeptical of the energy-services experts I relied on – the sell-side analysts covering the company. With all due respect, they didn’t see the November earnings miss coming, even though the slowdown in gas-drilling activity in the company’s key markets was no particular secret. I wasn’t out in the fields, talking to Poseidon’s customers and competitors. But I’m not really sure who, besides LDIC, was.
And three, given those first two problems, I didn’t assess the downside probabilities properly. There’s always a non-zero risk of complete blowups, whether it’s a storied Wall Street investment bank, a European country, or a Canadian energy company. The chance that Poseidon Concepts would implode was higher than I realized – or, perhaps, wanted to admit.
Last Thursday, on Poseidon’s third day of disaster, ill with the news, I mulled pouring in just under $1,000 to really, really average down to just under $1 a share. Maybe I could salvage something from this trade.
But I still couldn’t do it; I didn’t even want to pay a quarter. And that’s something I’ll try to remember next time I’m holding a loser: It doesn’t matter what you bought it for; would you buy it for that price today? And if not, the answer is to sell.
Because this is how I now assess the probabilities: The chances of it going to zero are better than it ever getting back to $3.40. I only wish that if you, too, are a holder of Poseidon Concepts, you hold it in a taxable account; the greatest value the shares will likely have is providing their holders with capital losses.
http://www.theglobeandmail.com/globe-investor/investment-ideas/poseidon-concepts-how-my-promising-bet-went-awry/article8906280/
Still trading in the U.S., and actually firming up a little at .16 x .1649. However, I still wouldn't buy any at this level.
There's no 'safe harbor' to be had in management making ANY statement about the chances of their stock being halted in the U.S. The only true statement that they could make is that the possibility certainly exists ... and the moment such a statement is uttered POOSF tumbles into the trips.
Better to remain silent and hope for the best.
Apparently being halted in Canada, but trading in the U.S. is not unprecedented. There is another stock that I am trading now on the OTC that has been that way for over a month.
I thought about that too. Could Canadian's transfer their shares to an American brokerage, and then sell?
Yes, IR has not returned my call or email on this.
"In addition, as a result of the requirement to restate the Financial Statements, the Alberta Securities Commission (the "Commission") has issued a cease trade order against the Company. The cease trade order prohibits all trading or purchasing in Company securities until the cease trade order has been revoked or varied by the Commission."
All trading?
Evidently not
How can PSN.TO be HALTED on the toronto, yet trading on the U.S. OTC Markets?
Can Canadians somehow transfer their shares from one exchange and sell them on another?
$16.80 down to .12/share
What a real shame
And not a word from Poseidon's IR or management team concerning a potential halt on the otc ?
Yeah thats what Im afraid of, is it worth giving up all my info. Thanks for sharing.
Thank you for the update. I and others here appreciate your shareing this information.
Still trading in the U.S. No reply back from IR yet. Via email or phone...
down down down to the day PSN.TO get back to market. If it out market maybe below penny.
You only get a small percentage back. I have been a member of a number of classes, and the amount I got compared to the loss was hardly anything. I lost about $5,000 on Mercator stock way back when, and got a check for $187.
Within the time frame stated in the suit. Im CDN so accounts differ from US. Im just wondering if giving my personal info to a US lawyer is worth getting $1500, or a portion thereof, back.
When did you buy your shares?
Anyone planning on joining the suit? My holdings are in tax free accounts so the suit is the only option I have. Would usually just use it as a writeoff but cannot in this case.
I agree on the numbers. The worries are a halt here in the U.S., bankruptcy due to creditors being able to call in loans based on the company missing certain financial milestones.
On the last one, I do not know much about it, but it has been brought up on this thread recently.
Thanks! Yeah, I think we know there is a lot of potential here, just have to be careful.
Good analysis on your part, however, you fail to factor in the massive lawsuit that's been docketed against the company ... a lawsuit so massive that it could well result in a BK.
THAT'S the over-riding fear here.
Thanks for your excellent running commentary on what's happening here. I firmly suspect that many are watching this ticker for further developments.
So here's my take....let me know if I'm completely off as this is just completely rough estimates:
"In particular, it was announced that approximately $95 million to $106 million of the Company's $148.1 million in revenue for the 9 months ended September 30, 2012 should not have been recorded as revenue in the Company's financial statements; and as a result of recording the foregoing revenues, approximately $94 million to $102 million of the Company's $125.5 million accounts receivable as at September 30, 2012 should not have been recorded in the Company's financial statements as accounts receivable."
So let's just say $100 mil of the $148 mil shouldn't have been recorded. Let's also say that $100 mil of the $125 accounts receivable shouldn't have been recorded.
I'm no math genius, but the deceiving numbers aside, my calculations don't come up with a $17 stock dropping to .20 cents off those numbers. Even if we just do a basic calculation using the accounts receivable....80% of the money reported should not have been reported....if that's accurate then only 1/5th should have been reported. Well 1/5th of $17 that the company was valued at now becomes around $3.40....knock off a couple bucks for skepticism and bad practice, the price would still be valued at around $1.50 or so and I feel that's pretty much lowballing it to worst case. Yet here it sits around .15-20 cents?
The company is still making $$$$. Things may be a little nutty right now and changes will most likely be made, but even with all this bad news I believe the current prices are a joke and this will be a money maker soon enough. This is now trading at levels of pink sheet companies with 1 employee and ZERO revenue lol....
Or maybe I'm just overly optimistic??? :)
Yeah, at .15 now. I would be tempted at .05 too, but I don't know. I think they could turn this around, but I am worried about a possible U.S. halt. At a penny, I would buy for sure though.
no, it looks like another drop is coming. At $0.05 I'll reconsider an entry. But there is limited bounce potential if the accounting scandal substantiates, only if the company can come out as a viable business at smaller scale. Enron never really bounced...
Well, we got a little blindsided by the halt. Now we were kind of forced to sell not knowing whether they would halt the stock in the U.S. too. The only reason I did not lose much is that I bought a bunch at .16 on Friday.
I am going to keep watching this to see what happens. There seems to be a buyer at .18 most of the time. Why?
I'm out too, in at .26 out at .185 excellent trading on my part ouch
Sold my shares at .20 for a small loss. I think it can go higher, but the whole thing is scaring me lol...
How investors could have known Poseidon was running aground
While not a huge company Poseidon Concepts was a very widely held retail stock, in part because the deep-thinkger at CPMS had it as a top pick (CPMS is a computer based stock picking system used by a lot of brokers). Investors got slaughtered on this one, which had now degenerated into an accounting scandal.
But there were clear and obvious signs, as The President’s Club Investment Letter made clear starting 7 months ago.
First, insiders dumped a huge amount of stock from the fall of 2011 to the spring of 2012. Given that the company was only recently spun off from Open Range at that time, it was a red flag:
The second one was margins: at 90% they were just too high to assume there would not be intense competition, especially given lack or proprietary information. High returns guarantee competition.
Third, drilling activity was slowing down, especially in the Bakken, suggesting that Poseidon would have to chase customers to get business, and compete harder, meaning lower prices. This was easy to verify with a Google search.
Fourth, and perhaps most important, was rapidly rising accounts receivable. In the third quarter of 2012 they surged $75 million compared to nine months earlier:
This entry was posted on Monday, February 18th, 2013 at 9:16 pm
http://www.fabricetaylor.com/?p=692
Yikes, yeah, looking like total bust.
Wow you nailed this one. I looked at some fins from 9 months ago 50 % net margins? I can only assume they were booking all future rental revenues in year one yet capitalizing purchase of same products over some extended period of time. Which really is nothing short of and internal ponzi scheme or house of cards.
Kudos to those who shorted this when they saw this obvious red flag
Yes.. What a Mess!
Saw that. I guess they can stack that on top of the lawesuit from November. It will b years before it's resolved.
NEW YORK, Feb. 16, 2013 /PRNewswire/ -- Tripp Levy PLLC, a leading national securities and shareholder rights law firm, announces that it has been retained to represent shareholders of Poseidon Concepts Corp. (TSX: PSN, OTC: POOSF). The lawsuit alleges that, among other things, Poseidon Concepts made statements that were materially false and misleading regarding Poseidon Concepts' financial position, financial performance and cash flows, overstated the company's incomes and reported inflated assets.
In particular, it was announced that approximately $95 million to $106 million of the Company's $148.1 million in revenue for the 9 months ended September 30, 2012 should not have been recorded as revenue in the Company's financial statements; and as a result of recording the foregoing revenues, approximately $94 million to $102 million of the Company's $125.5 million accounts receivable as at September 30, 2012 should not have been recorded in the Company's financial statements as accounts receivable. As a result, the first, second and third quarter 2012 financial statements (the "Financial Statements") will be restated and the Company advised investors that they should no longer rely on the Financial Statements.
The lawsuit is brought on behalf of all persons who acquired securities of Poseidon Concepts on or prior to February 14, 2013, whether in a prospectus offering or in the secondary market. If you purchased Poseidon securities on the U.S. or Canada markets prior to February 14, 2013, and would like to be a part of an action to recover your losses, at no cost, please contact us at:
Tripp Levy
Tripp Levy PLLC
125 East 82nd Street
9th Floor
New York, New York
Toll Free: 877-772-3975
Email: contact@tripplevy.com
Tripp Levy PLLC is a na
Would anyone want to buy this company out? Do they have assets? I'll have to research more later. I dont think Monday is a holiday in Canada, so it will be interesting to see if anything more develops.
the real issue I see is whether the company would be forced into bankruptcy retrospectively.
The company reported $0.85 per share net income over the 9-months 2012 period. A total of about $0.81 cents per share were paid out as dividends. If you declare 70%+ of the top-line revenues as "bad" and remove them from the financials, the operating results would not cover dividend expense by far, resulting in a significant loss. The next question would be if creditors can force the company to default by the statutes of the covenant agreements in place.
Very interesting situation, nonetheless.
A few things:
1) They were right. After closing at .27 Thursday, the stock hit .12 yesterday.
2) The stock was halted in Canada, but not the U.S. The company files no docs with the U.S. All filings are made to the Canadian Gov't.
3) The company made $42 million in 9 months.
4) The stock has been shorted to the hilt, and at some point those shorts will close out their positions.
Short sellers feast on Poseidon Concepts
2/14/2013 7:32:54 PM | Stockhouse Editorial
3734 Reads | 2 Comments
A sell order by one Canadian analyst suggests that the stock could go even lower after tumbling 69% on Thursday.
Thursday was a banner day for short sellers targeting Poseidon Concepts Corp. (TSX: T.PSN, Stock Forum), and there may be more to come.
News that about two thirds of the oil field company’s previously posted revenue this year should not have been recorded as revenue on its financial statements sparked a mixed of anger and frustration as the stock fell 69% to 27 cents on volume of 15.6 million shares, leaving the company with a market cap of $22 million, based on 81 million shares outstanding.
Prior to Thursday’s collapse, the stock had traded in a 52-week range of $16.88 and 85 cents.
“This is probably the ugliest story that we’ve seen on Bay Street since Sino-Forest,’’ observed Martin Braun, senior investment strategist at Toronto money manager J.C. Clark Ltd., in an interview with the Globe and Mail newspaper.
“They’ve now decided that a lot of revenues never were revenues. That’s not good,’’ he said.
One Stockhouse Bullboard poster wondered why the TSX doesn’t halt trading and start an investigation. “This situation casts a black mark on the TSX and its regulators. Shame on them!” wrote Upside123 in a Poseidon Concepts post.
Poseidon is the product of a reorganization that saw its predecessor Open Range Energy Corp. (TSX: T.ONR, Stock Forum) split into two separate companies. One is a natural gas exploration and production company. The other pays dividends and is engaged in energy service and supply.
The arrangement won shareholder approval in November, 2011.
On Thursday, Poseidon said up to $106 million of its $148.1 million revenue for the nine months ended September 30, 2012 should not have been recorded as revenue in its financial statements.
It also said that a result of recording the foregoing revenues, up to $102 million of the company’s accounts receivable as at September 30, 2012 should not have been recorded in the company’s financial statements as accounts receivable.
As a result, financial results for the first three quarters of 2012 must be restated. The company also said all previous guidance with respect to its business can no longer be relied upon.
This admission comes less than a month after law firms in Calgary and Toronto filed a proposed class action against Poseidon, and certain of its officers and directors. The proposed class action includes persons who acquired securities of Poseidon Concepts prior to December 27, 2012.
They include participants in a $82 million bought deal financing, comprised of 6.4 million shares and priced at $13 a share.
The financing syndicate was led by National Bank Financial Inc. and closed in early February, 2012.
The suit alleges that the defendants made statements that were materially false and misleading with respect to the company’s financial position, financial performance, and cash flows. The suit also alleges that the defendants overstated the company’s income, while reporting inflated assets.
Among other relief, the proposed action claims $251 million in damages.
Poseidon has said the company and the defendants named in the suit “intend to vigorously defend the lawsuit.’’
Meanwhile, Canaccord Genuity analyst John Tasdemir cut his rating on the stock to “sell” from “hold,” citing zero forward guidance from management.
It means the stock is likely to fall even further in the coming days.
Read more at http://www.stockhouse.com/opinion/short-report/feb/14/short-sellers-feast-on-poseidon-concepts.aspx#rMu62VdY684MFTY3.99
Not sure why that is. One of the questions I left for IR was whether that was possible. I think it's not halted here because they have not violated any rules here.
If PSN.TO is halted, then why arent they halting the POOSF shares here in the United States?
One would think POOSF will also be halted today or in the coming days.
In my opinion, yes. That's why I am still holding my shares. That being said, it is risky. I am waiting for IR to call me. If they say they will be issuing revised financials next week, and expect to be unhalted (either by issuing those financials or by some appeal), then I will feel pretty good about holding.
The company still made like $50 million in 3 quarters.
$ possible again?
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