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I've found the price action to be interesting
This week myself. Longs are supporting the price in the mid-high 2s pretty strongly. Longs know the story, so absent materially bad news relevant to AYSI, I don't think we'll see a big pullback before earnings.
Did you say previously you'd sell at $5?
Or will you reevaluate based on your estimate of earnings and growth potential going forward?
Sounds reasonable.
BTW, did you get my e-mail?
There's always the possibility they won't
Give any guidance. But the way things are going, I wouldn't be surprised to see another positive announcement between now and the end of the year. Maybe Mongolia? Another LT supply deal with another miner or OEM?
Any thoughts on this micro cap tech: DSNY?
Bonham did leave a talented son though.
Who played at Led Zeppelin's sold out reunion concert in London a couple of years ago. I know Gene's got a son working for the company. Maybe he's got talent too? In any case, here's hoping Gene takes care of himself and stays healthy and in charge for many years to come.
My sense is that you are right,
But in the interests of being balanced, I thought I'd put that out there.
BTW, a demo version of that other site is up. If you want to kick the tires on it, shoot me an e-mail.
Reminds me of something similar.
At the turn of the century I was working for a start-up that had two better-financed competitors in the same space. The CEO/founder of my company was incredibly tight with a buck. While our competitors were in glitzy offices in big cities, we were in an office stocked with used equipment and furniture in Nowheresville, NJ. Long story short: both of those competitors have long since gone out of business, and the company where I worked is profitable and still growing (enough to be in the middle of the pack on the Inc 5000 list).
There's definitely something to be said for prudent CEO/founders who concentrate on building a better mousetrap instead of appearances. That's something I like about Gene and AYSI too.
Caution flag?
Last spring, when many were bearish on this sector, I noted some bullish indicators here: e.g., the volume of iron ore China was importing, the rise in the Baltic Dry Index, etc. In the interests of objectivity, I'll note this now: This item in yesterday's FT suggests that the recent drop in the BDI indicates slackening Chinese commodity demand, perhaps as a result of them being done stockpiling for a while: http://www.ft.com/cms/s/0/fd5c034c-a922-11de-9b7f-00144feabdc0.html
He's thinking that swing traders from I-Hub
drove up the price.
Let's hope no one at AYSI
chokes to death on his own vomit.
The one person (that I know of)
That bought AYSI after reading about it on my blog last year told me he just sold. He still likes the story, but said he sold based on the chart. He thinks it will consolidate in the mid $1s and he can get back in. I told him that I see the stock being moved by fundamentals, and I don't see it moving significantly down from here (or up, for that matter), without additional news.
Incidentally, here's the website of Alloy Steel's Mongolian law firm: http://www.anand-advocates.com/clients/clients/our-clients.html
I wonder if that JV is getting revisited.
Question for the board.
I asked this elsewhere, but the thread was lost:
How low an earnings number would AYSI need to post in December for you to be disappointed or have doubts or concerns about the story? .04? .08?
I shorted this at $13.78 last week.
I laid out my rationale for that here: http://thehackensack.blogspot.com/2009/09/new-short-position-bagl.html
I guess "fully utilized" means that
re the first mill.
Question for you, LF:
Did the firm specifically say it was running both mills at capacity now?
Whatever happens, happens.
If we get a dip, I'd consider adding more, but if not, I can't really complain. I was late to finding out about this story, and first bought at $2.28. Had it gone straight up from there, I'd have a lot fewer shares today. By averaging down between $2.28 and $0.223, I picked up about 7x more shares than my initial position. In hindsight, it would have been great to pick up more, but I have enough to feel the warmth.
Realistically, given the current group of shareholders, I don't think we'll see a significant drop here now without significant bad news that's directly relevant to AYSI; I don't think a generic correction in U.S. stocks, for example, is going to move it much.
Also, if you're right about Gene and Alan holding onto most of their shares, that raises an interesting question: if they're holding onto their shares, why shouldn't we hold onto ours? Gene, in particular, has, I'm sure, a higher percentage of his net worth invested in this company than any of us do; he also has a better idea of his company's prospects than any of us. If he's still bullish, we should be too.
I'd like to see a dip too
Question for the board: what are the chances that Gene or Allan unload a few of their shares now?
They get some nasty storms
during their winters too.
You may not have to
But it would be a nice gesture on your part.
Just a thought.
Why not let Littlefish be the moderator then?
(Assuming he still wants the job) Since you aren't in the stock anymore?
I've been thinking of heading to Perth anyway.
Since I read this: http://www.news.com.au/perthnow/story/0,21598,23931386-2761,00.html
There are probably some great local companies in Perth worth looking into as investment prospects.
Peter Lynch warned about weeding your flowers.
Another way to think about this.
After posting that news item about BHP predicting a doubling in steel demand over the next 15 years, I pulled up the stats on BHP. This is a mega cap blue chip, of course, and it's trading with a trailing multiple of 30x+ and a forward multiple of 20x+.
At this point, AYSI is probably trading at a forward multiple of maybe 10x, assuming it will generate 20-25 cents in EPS over the next four quarters.
So, if you're bullish on the secular China/steel/iron ore story, you can pay 20x for a mega cap miner that will benefit from this growth, or you can pay ~10x for a micro cap mining equipment manufacturer that will benefit from this growth as well, but in addition, has the much larger growth potential that comes from starting with such a tiny market share in its niche.
BHP sees global steel demand doubling
Within the next 15 years. Here is the link: http://www.ft.com/cms/s/0/c3ecaa86-a2aa-11de-ae7e-00144feabdc0.html
Something interesting about this is
What Gene has done with so little outside capital. How much did he raise with his initial IPO of AYSI? It's amazing when you think of the amounts of money Internet companies are raising to get started (e.g., I think Mint's last venture round was ~$120 million, before it got acquired at ~$175 million recently) that someone could build a profitable manufacturing company and lead it on a path to high growth with hardly any outside capital, by comparison.
What's your ticker say now, Rawnoc?
That's a good point.
Gene and Alan were more willing to correspond with shareholders before the misinformation campaign by a certain prolific poster.
Revisiting The Chinese Economy and Alloy Steel
A key argument of Alloy Steel bears last spring was that the deep recession in the U.S. and the rest of the first world was hammering Chinese exports, and without those exports, China's economy would sink -- and with it, so would China's demand for iron ore and other raw materials.
Back in May, I posted some tentative data here that suggested that Chinese demand for iron ore was growing, and I also posted a link to an FT essay by James Kynge which argued that the Chinese economy would continue to grow by shifting from depending on exports to self-fueled internal growth. Four months later, it looks like Kynge was right. I just wrote a post explaining why: http://thehackensack.blogspot.com/2009/09/chinas-new-self-propelled-economy.html
Wonder if we'll see a dip if
Earnings aren't as high as anticipated in the upcoming quarter. If so, that would be a nice buying opportunity.
Wear isn't just a problem for iron miners.
Any kind of mining, digging, excavating, etc., subjects expensive steel equipment to the wearing effects of rocks, silica, etc.
And also, as LF mentioned, the big BHP deal is just for WA. If super arcoplate wear plates make sense for iron miners in WA, why not for iron miners in Brazil or the U.S. or Canada?
Let's also not forget about the Mongolian JV that was put on hold last year. How long until that gets revived?
Thanks Threes.
The economy and the inventory numbers were concerns for me too, but the company's high Altman Z-Score (along with my own DD and especially Littlefish's) gave me the confidence to keep buying all the way down. I didn't expect the company to land such a huge deal so soon (if I did, I would have bought a lot more), but I figured the company had an excellent chance of staying in business until the worst was over.
I've been using the Altman models a lot more since then. A good tool to have.
Even if you knew nothing about Arcoplate,
The Altman Z-Score -- a model that has been demonstrated to be about 72% accurate in predicting bankruptcy within two years and about 80-90% accurate in predicting it within one year -- clearly signaled that Alloy Steel was in no danger of bankruptcy in the near future. That's why I posted the Altman Z-Score data for Alloy Steel here earlier in the year, despite getting crap for it.
You're welcome. My pleasure.
I sent Gene a congratulatory e-mail.
In his response, he wrote: "much more excitement to come".
A Conversation with USEG Management.
Quiet board. Here's a link to a conversation I had with USEG's CEO, CFO, and head of investor relations recently: http://thehackensack.blogspot.com/2009/08/conversation-with-useg-management.html
Memories.
A tiny float works both ways.
Today is perfect evidence of that. The same tiny float that helped this stock drop like a stone on bad news last year is having a reverse effect now.
We should thank Rawnoc
For helping us average down at such low prices.
What huge news today. Congratulations to AYSI management and all the longs that stuck with this, and particularly to LittleFish.
Incidentally, I suspect it was Kostecki who left the recent anonymous comment on this old post of mine, http://thehackensack.blogspot.com/2009/04/run-silent-run-deep.html
I still like Kostecki though. He's a little like a real life Hank Reardon. The man created something new and innovative and is building a business on it, without the benefit of institutional investors or loads of borrowing. I respect that. Even if he's been ornery recently.
Nope, still updating it. Try clicking here:
http://www.thehackensack.blogspot.com/