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The CFO says they are replacing the website.
I spoke to AYSI CFO Barry Woodhouse briefly overnight and asked him about that. He said they had a couple of alternative new versions of the site designed but were waiting for Gene Kostecki to pick one when he gets back from his current trip to Indonesia.
The main reason I had called the company was to see if they'd be willing to address shareholder questions relating to their decision to delist. Woodhouse said he'd ask Kostecki about that when Kostecki got back from Indonesia.
And Gilead raved about AYSI with this post when the stock was at $3.15: http://seekingalpha.com/instablog/157748-michael-alexander/48724-aysi-s-disruptive-technology-leads-to-record-growth-and-earnings
If we would have been better off selling when Gilead was bullish at $3.15, does that mean we'd be better off buying now that he's bearish at $0.53 -- contrary indicators and such?
I don't know. Maybe the company can clarify.
I think the answer is in your link:
"The legislation does not affect the SOX 404(a) requirement. Companies with public float of less than
$75 million must continue to comply with SOX 404(a), which requires management’s assessment of internal controls over financial reporting."
The point is that lack of liquidity doesn't equal lack of value. If it did, all real estate would be worth $0 because it's all illiquid.
And it may be that AYSI's liquidity on the Pink Sheets won't be much less than it is now. By way of example, the last Pink Sheets stock I owned has a share price in the same range as AYSI but has had 4x the average daily volume of AYSI over the last three months.
Not bad. Got back and saw no fill in the low .40s. Just upped my limit to the low .50s.
Interesting to see they only gave you 100 shares below .40. Those bids in the .30s were mostly b.s., apparently.
Illiquid investments can still have value. If someone offered you 1000 shares of Facebook, would you turn it down because it's illiquid? Of course not.
That said, it's not necessarily the case that AYSI will be that much less liquid on the Pinks. There are Pink Sheet stocks that have been a lot more liquid than AYSI has been recently on the OTCBB.
There are some Pinks that are more liquid than AYSI has been on the OTCBB.
No fill on my limit order in the .30s, so I bumped it up to the low .40s.
I'm heading out to a couple of meetings, so I'll probably be offline most of the rest of the day. GLTA.
Thanks, just curious.
Actually, it does Brig.
Market value of equity (which in the case of AYSI is essentially the same thing as market cap) is one of the variables the Z-score includes.
A select one already owns most of the company, and it looks like a select few can buy as much as they want today at less than 3x ttm earnings. Doesn't seem to be a huge advantage to going private versus just de-registering.
I just put in a limit order here
But given this stock's history, I've generally kept my buy orders small. I wouldn't pile in unless I thought I could pick the bottom, which I can't.
What would be the advantage of doing that?
Going to the Pinks gets them out of the expense of being registered.
A couple of questions for the board:
1) Why did JBII de-list from the OTC BB to the Pink Sheets?
2) Did JBII's move to the Pink Sheets change your view of the stock? Did you feel that its move to the Pink Sheets was a sign of scandal, an indication that the stock was headed to zero, or that the company was broke? Or did you feel that it was a prudent move based on the company's circumstances?
Not only is the company profitable but it has posted record revenues so far this year. Paying a dividend at this stage in the company's growth wouldn't make much sense though.
When growth companies start paying dividends it's typically because they don't have anything they can invest that cash in that will generate a high return on investment. That's not the case with AYSI currently. AYSI can invest its retained earnings in additional manufacturing capacity, which will enable it to continue to grow revenues and generate higher profits.
That investment thesis remains intact, though the stock may drop in the short term based on the news the company is delisting to the Pinks. As I wrote in that article,
"My general idea regarding small growth companies is that if I can buy shares at a single digit multiple to a conservative estimate of what the company will earn next year, that’s probably a good deal."
I still think ~17 cents is a conservative estimate of the company's fiscal '11 earnings, and at today's closing price it was trading at less than 5x my forward estimate.
I'll wait to see what the stock does from here and will probably add more on a dip.
Based on that comment I'd have to say I question the value of your comments on AYSI or any other stock. You say you place "no value in the metrics" of the Z-score. Do you even know what those metrics include? They include assets, liabilities, working capital, EBIT, revenues, and retained earnings (in addition to market value of equity).
If you place no value on those metrics, you're essentially saying you place no value on a company's income statement and balance sheet. Which may be the case with you. And yet you pretend that a company's decision to delist to the Pink Sheets trumps all, when in fact you continue to own and post bullish comments about companies that have been delisted to the Pink Sheets.
Here you go, Brig:
The current Altman Z-score (which is based on the company's current financials and market value of equity, and is unaffected by the exchange the company is listed on) is 5.13.
Recall that scores below 1.8 indicate financial distress and high risk of bankruptcy within the next 2 years; scores from 1.81 to 2.99 are a gray area; and scores above 3.00 indicate financial strength. So a score of 5.13 indicates significant financial strength.
That AYSI would have a high Z-score here makes intuitive sense, if you consider that it is profitable, has a healthy amount of cash and positive working capital, and relatively little debt.
In some cases, companies de-list because they simply don't have the money to pay the filing costs, or they can't file on time due to discrepancies in their accounting, or other issues -- you should be familiar with these types of situations, as you have owned companies where this sort of thing happened.
In the case of AYSI, it appears that they decided to de-list because they weren't getting any benefit out of their OTC BB listing.
In our last conversation, AYSI's CEO and CFO expressed frustration with how the market was valuing their company, and they had a point: why should a profitable, growing company be given a Depression-era valuation? I guess they figured that valuation didn't justify paying the compliance costs associated with an OTC BB listing.
Since you actually own Pink Sheets stocks, perhaps you can tell us why you remain bullish on your stocks when they move to the Pinks but are bearish on AYSI moving to the Pinks.
Pink Sheets stocks seem to be popular here, even ones with no earnings, massive dilution, and vaporous technology, so maybe a company with actual earnings such as AYSI will attract a new audience of iHubbers once it moves to the Pinks.
I got a fill on a limit order at .86 last week. Maybe I'll put in another one today.
Someone seems to be accumulating every time it drops below .90.
Another concern I'd have
Is that when you're dealing with new technology, even if your process works in test mode, there are often unanticipated challenges in scaling up production. It's one thing to be able to make something; it's another to make it cost effectively in economically viable quantities.
Larry Fitzman
716-851-7130
Thanks.
Who did your friend speak with at the DEC (in the event someone wants to call Tuesday morning to confirm)?
Apples to apples
Ttm P/E of the market at the end of the post-Depression secular bear market versus ttm P/E of AYSI.
The last four quarters for AYSI include two weak quarters bracketing two strong quarters; given the lumpiness of its quarterly earnings, I'd be hesitant to extrapolate a trend from a one quarter, strong or weak.
A little perspective:
At the end of the bear market that followed the Great Depression, stocks were trading at about 7x trailing earnings on average. AYSI is now trading at about 3.7x its trailing twelve months earnings.
OK, thanks. Good luck with it.
OK, thanks, wasn't sure.
Any word on that stack test, btw?
No problem. Not sure why my order didn't get filled, but I just put in another one.
Yes. I spoke with Gene Kostecki and the new CFO Barry Woodhouse last night, and posted their answers to the shareholder questions here: http://steamcatapult.com/2010/08/31/answers-from-alloy-steel/
If it drops to .45, I'll buy it there too. But I don't know that it will drop that far, so I'll try to add a little more around here.
Thanks. Had a limit order in at .80 today but that didn't get filled for some reason, despite the drop.
Filled at .90.
Got a small bid in at .90 but no fill so far.
Last call for questions for AYSI's CEO & CFO.
Scheduled to speak with them tonight. Leave your questions here or forever hold your peace: http://steamcatapult.com/2010/08/18/questions-for-alloy-steels-ceo-and-new-cfo/
That would be a good question for you to leave here: http://steamcatapult.com/2010/08/18/questions-for-alloy-steels-ceo-and-new-cfo/
Mat,
I agree that it will take a combination of improved performance and communication to repair confidence and raise the PPS. As I mentioned in that post, given the steep sequential drop in earnings and margins, AYSI would have taken a hit even if the company had better shareholder communications. But not as big of a hit.
I'd estimate that about half of the recent drop was due to poor communications (e.g., raising expectations with announcements of future developments only to not follow up on the status of them). With better IR, this would be trading at around $1.50 now, IMO, instead of its current price, where it's trading at less than 5x its ttm earnings.
Again, if you or anyone else has questions of Gene Kostecki and Barry Woodhouse that you'd like me to ask them, feel free to leave them here before Monday evening: http://steamcatapult.com/2010/08/18/questions-for-alloy-steels-ceo-and-new-cfo/