is...hopefully making money
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People care when they could be earning better returns elsewhere. You are describing a chicken and an egg problem. You are assuming that CCME will automatically earn the respect it deservers years out. What if they don't? Everyone should be urging management to do the things that they need to be doing now, not banking on where it will magically be 2-3 years from now.
I know a lot of good comapnies making a lot of money that have traded like dirt for 5+ years.
Right, that is why I included analyst coverage as one of the prerequisites to get back to a more reasonable multiple and thus $20. If 100%+ sequential revenue growth, growing margins, increased guidance and the addition of 2,000 busses wasn't enough to sustain 9x, 8x and now even 7x earnings, why would I possibly believe that any of those things would suddenly garner more respect in 2011? They won't, not until credibility is established.
Credibility = show us the money or get a big, reputable firm to confirm that CCME is the real deal, not a fraud. Until that happens take 5-6x whatever you expect them to do in 2011 and that will be your PPS. It doesn't add up to $20.
Amen. The only support we have at this point is the previous 52 week high. After that, all bets are off until the $12s. We are in the low $15’s and there is little buy side action. For sanity's sake I've got to believe that Jacky realizes by now that no amount of contract additions, guidance raises or other talks about the future growth opportunities are going to provide sustainable capital appreciation until the credibility issue is addressed. The ONLY thing that got us out of the gutter was the "head fake" buyback. When people realized they didn't buy any back we gave back $7 a share.
I don't make the rules, but I do think it is foolish to try to argue amongst ourselves about whether or not the company is doing everything that they can to prove their credibility while the market is clearly still slamming them like they are a fraud. The market is screaming from a mountain top "prove you are real and we'll pay $30 a share, until then we're going short!"
I view this December’s PR as a last stand to make a surprise move to address the credibility issue, and that is what I expect. If that doesn't happen I anticipate that many more institutions and retail investors are going to continue to walk away in droves from the greatest company ever to trade like it was a slug.
I believe that if there is basically very little possibility of CCME hitting $20 again in 2011 without a dividend announcement or major analyst buy coverage. I think Jacky will realize that and act.
OT: Ouch, jobs report was nasty. Just what the shorts were hoping for. Buckle your seatbelts, because we are in for a ride today.
And two deeply red days on wildly green world market days is pretty troubling. Trading like a POS again - no respect at all.
MS coverage would be a very nice early Christmas present.
Value - I agree about the potential catalysts, though I feel that the only ones that would be meaningful at this juncture are the analyst coverage, media coverage and divi. Anything related to revenue won't have much of an impact IMO. I can't get past the fact that they added enough busses to increase revenues by 7% and the stock has pulled back considerably since the announcement.
As per the "new kid on the block" statement, I don't know if I agree - not fully anyway. There have been many new IPOs that bum rush to full valuations right out of the gate when credibility isn't a big concern. Granted CCME was a reverse merger, not an IPO, but I think the market has had plenty of time to digest the business model and financials and make a decision on the company. Right now it is clear they don't feel like sticking their necks out.
It sounds ridiculous to me reading that last line; that anyone would feel like they are sticking their neck out with CCME, but that is the only explanation that I have for a rediculous PE on an insanely profitable company.
And then the rest of the pack, which are viewed as garbage. My investment thesis here is that CCME will make the transition at some point to the higher tier.
Well said. I wholly agree with you that we are very likely to make the transition. The when part is what is frustrating. It is my opinion that we should be there already and had some different decisions been made we would be out of the garbage category and trading with the "premos" already. I guess when we do get there it will make the taste of victory that much sweeter :)
Another way to think about - do you think that the distant, unfounded threat of a hitpiece disseminated by some third rate blogger could possibly cause a material negative effect on the PPS of a reputable company such as Apple, Microsoft, Bidu, etc? However if someone utters the word "Hit Piece" on a blog regarding CCME we lose 10% in a week. Credibility is our sole enemy here. We have too little.
I think that can certainly change over time but management needs to lend a helping hand. Once we have it, sky is the limit.
Gunnar, your logic is sound, however if you look around at other Chinese small caps, many have been trading at 4-8x earnings for years, despite stellar performance by the companies year in and year out. As much as I wish the market was rational and saw things our way, that clearly isn't happening. It won't happen long term either if certain things relating to credibility don't happen first. You can't do the same thing over and over and expect different results. I am convinced that the company could double their revenues within two years and still be trading at a pultry 8-9x earnings, becuase the market doesn't see them as a truly distinguished, and therefore less risky company.
I am holding my shares because I do believe Jacky will ultimately realize that the only way he is going to make shareholders (and by extension themselves) wealthy is to get investors, and primarily institutional investors, to think of CCME as a truly different and more REPUTABLE company than other Chinese small caps. Reputation is currently paying significantly more than enhanced earnings. It's just that simple.
Guys, the price action is 100 percent related to credibility. The company announces a stock repurchase, we soar 100 percent. Everyone finds out they didn't buy any shares, we retrace 50 percent, despite 2000 buses being added.
No news that is directly related to the company's credibility, ie divi or buyback news will have a material positive effect on the PPS. Anyone that does not realize this by now is dillusional. If you need any evidence, look to the 10q and 2000 bus PR and subsequent selloffs.
We are back where we started. Great numbers but too few believe them and there is too much retail in this stock. Jacky has done everything right, except for the most important things pertaining to PPS.
I can't speak to your specific anecdotes but I can say based upon everything that I have heard and experienced myself, the Chinese government loves to steal other country's proprietary information, with the US as their top target.
They are, however, very good to their local enterprises that "pay to play." Corruption is definitely still a huge problem in China, as it is in most countries, and most certainly is in developing countries.
That said, there is a boatload of money to be made in Chinese small caps, but you have to do your DD and be very agile.
What's even crazier to think about is that the could spend that $150 million in January and they would be right back up to having $70 million in the bank by June. Their cashflow is literally mind numbing.
I agree that we would probably have taken out $19 again if the overall markets had not tanked. What's frustrating is that this stock is still so easy to manipulate. If we had a higher class of investers in here with us the trading would eventually stabalize and shorts would go away. Still too much retail and traders to make the consistent and reliable ascent that we know will eventually come.
That is why I was so frustrated after the 10Q with no divi and buyback because that would have brought us the investors that this stock needs for long term performance. It is truly proposturous for us to still be trading at anything less than 10x earnings, and even 10x is a slap in the face for a company with the margins, cashflow and topline growth that CCME consistently demonstrates.
Today's trading looks highly manipulative. Large blocks going off to the upside followed by sustained small block dumping, rinse-repeat. It looks like a big buyer is trying to use the heavy red market fears to shake out cheap retail shares.
Yes, I am quietly awaiting a 5,000+ bus announcement :) One would have to assume we would get an instant guidance increase - heck, the two contract announcements today could justify another guidance raise. 8% is not a small number. Many companies aren't growing revenues by 8% in an entire year of sales.
Just doing some fuzzy math and some conservative estimates regarding M&A activity, I don't see how CCME does less than $3.50 a share in 2011, even with the earn out shares. $4 is quite likely in fact.
Anyone that can do math will be excited about the news. They just increased their network by 8%. That should add somewhere in the range of $.20-.22 per share annually, and proportionately more as they increase their rates.
I remember that a while back someone came up with good estimates for how much revenue and net income each inter-city bus and airport bus generated. Does anyone have those figures handy?
$17.20 pre-market - Update: $17.40 on nice PM volume. could be a fun day.
2,067 buses is a significant addition and I always love reading about 5 year contracts. That's 2,067 buses that will be providing guaranteed revenue until the end of 2015.
The stock doesn't trade in a straight line up, and it's all gloom and doom?
I think most everyone here is still holding and still has incredibly high expectations for the company based upon what I have read. I don't sense doom and gloom, just a sense of frustration over what is perceived to be a very considerable missed opportunity to make that major jump in credibility and notoriety that most of us thought was coming with the buyback and a dividend. That burning desire "to strike while the iron is hot" that was not fulfilled.
The Chinese small cap space has been littered with fraud and fraud accusations, and many have tried to lump CCME in that category. This was a big chance to completely and unequivocally shred that stigma and garner the proper level of distinction that this company deserves. A chance to trade in the big leagues sooner rather than later. That time is coming for sure, but the company is ready now - so am I.
The current churning at this lower floor, though healthy, is still a reminder each day that we would probably have a floor in the low $20's with plenty of room to grow if that divi had come and if more of the float was locked up with the buyback. Now there is a doubt about whether or not the divi will come and that is a bit frustrating, but is outweighed by the fact that the company does still have $170 (well now probably about $180) million in the bank ready to strike. That's still a very reassuring statistic. Bring on 2011.
I agree - transparency about cash management has been the biggest thorn in our side, bar none.
Sorry Value - I should have read your response first as we made many of the same points :)
True, though someone is buying the heck out of the stock in the $16-17 range. The silver lining to what is going on is that the next wave of institutions that are accumulating at these levels are more likely to hold the stock until the high $20's or even low $30's, so we are in the early phases of being set up for another big leg up IMO. They are also more likely to initialize coverage with high targets to boost their shares.
As per catalysts, we do have the December talks about strategy for 2011 and you never know what Jacky might throw out there for us at that time. Plus we could receive new contract announcements, analyst coverage, major acquisition news or more information about new service offerings in the near future. So though there aren't many guaranteed catalysts in the near future, there are a considerable number of possiblities (an IMO near term probabilities) that could send us sailing again very soon.
Even without a major catalyst I think we resume the ascent north again soon, baring further market corrections or big international news.
I think what is frustrating to many is that if we had a divi announcement or had they bought back a bunch of shares, the trading situation would be more favorable. Personally, my frustration about all of that is starting to unwind as I look to what is still sure to be an incredibly promising future. I still want a divi eventually though. That move along with a big acquisition will take us to the big leagues. 20+ times earnings IMO.
IBD 100 yeah, and we are way overdue for additional analyst coverage. I thought we'd have 4 or 5 analysts covering by now, so I'm thinking we get a good surprise in that regard very soon.
Side note: GRUBER & MCBAINE sold out of 532,000 shares prior to the runup. Ouch, I guarantee they are very much still hating to have to look in the mirror each morning :) That was a $5.6 million dollar miss....hindsight and all of that.
Yes, December timeframe for 2011 discussions. Should be very positive and maybe he slips a wildcard in there for us.
I agree with you. I'm not attempting to make a case against CCME's price action, there is a lot of macro and China specific issues going on causing a lot of volatility. I am simply observing the effect that these issues, and anything else that might be contributing to what appears to be a lot of turnover in institutional ownership.
I think if the institutions that bought in prior to the major run up were all still there the floor would have been higher, like $18-20, because so much of the float would have remained locked up. The good news is that there is heavy enough accumulation at the $16-17 level to prop things up in light of these macro issues. I think we are back to more retail ownership at the present moment, but that is being flushed into institutional hands rapidly.
I'm dying to find out who the big buyers are, because coverage should come soon with these price levels. If GS is adding here in a major way, I'd expect coverage within a few weeks at most with a $30+ price target.
So do you think it is institutions, not shorts, driving the shakeouts so that they can accumulate? That is a very viable possibility and I agree it would be very good for the stock long term if that is what is going on.
That said, I would have thought that over 2/3 of the float would have been locked up by now, making these shakeouts much less fruitful then they have been - especially at these prices.
I think a good shakeout after an ascent back into the $20's would be much easier to explain and correlate to heavy institutional accumulation.
I think technicals are out the window right now. There is a lot of macro news that is shifting the market’s mood day by day causing major fluctuations, especially in speculative emerging markets.
It also seems to me that the trading pattern of CCME indicates that a lot less of the float is locked up than we might have hoped for at this point. There is a lot of manipulative driving of the price down and covering/accumulating once it bottoms out. It almost seems that the powers that be were able to close the stock red yesterday at will, even on a very green market day. No doubt that was a planned effort to scare retail.
To be able to manipulate the share price so effortlessly seems to indicate that there is still a very large retail presence in the stock and that they are very easy to shake out. Perhaps a lot of the institutions that jumped in prior to the Sept 30 report date may have taken their gains and are taking the sideline for now, maybe in light of more macro fears about a significant pullback?
Don't get me wrong, I don't mind churning in this range, though I had hoped the floor would have been set closer to $18-20 range after the 10Q with the higher institutional ownership.
Would anyone care to chime in?
There is strong support at $14.35. CCME and VISN were both up after hours, the China ad space may be looking for an oversold bounce today.
Chuck - Thanks for your post. Watching 30% of profits dissapate in 6 days is attempting to get the better of me, especially in light of the fact that CCME traded so irrationally for so long. I don't want see us in the same boat we were in 6 weeks ago and I can't help but feel a bit like management's decisions have jeapordized some of our profits. That said, CCME has still been a sound investment and one must look at the positives in each situation of which there are plenty.
I'll take some time to chill out and make my decisions when I'm a bit more level headed :)
No,and to expect strength today would be unrealistic. It is the severity of the weakness since the 10Q that has me deeply concerned. More people on this boad, which are the longest around, are indicating that they expect Jacky to do nothing. What do you think the rest of the market is thinking right now?
This volume tells us one thing....all the big money that we thought was putting a nice floor in for us is running for the exits. This is the market issuing a referendum on Jacky after the 10Q. That stunt he pulled along with no clear vision of what the are going to do with their cash has caused another exudus. We are right back where we started in wait and see mode.
First time since January I'm considering taking my diminished gains and looking for greener fields. I don't feel like going through all this BS again. We had a chance to set a floor in the 20's but that ship has sailed. Now its up to Jacky....blah
There went support at $16.20. Time for a fast break into the $15s. Friggen rediculous.
Agreed that we can't keep hoping for a catalyst. We had it - Jacky was going to prove that they were the real deal with the share buyback. That bought some temporary credibiilty but he screwed us on that and that credibility has eroded. There is no way to explain that away.
The market isn't waiting for more quarterly announcements of proved earnings, they have shown they can deliver on that - I doubt there is any question about how their numbers will look each quarter. People still aren't buying into management long term and I maintain it is because of the lack of trust related to them doing the right thing with their money.
The market has bought the business model, they are not buying management. Only a dividend or a massive acquistion that proves they had a plan all along will change that IMO.
It is not a selloff on no news, people obviously didn't like what they heard (and didn't hear) in the CC and have been exiting stage left. 7 million shares traded with $6 a share shaved off tells us that. The buyback stunt combined with no divi was a slap in the face to longs that have been through thick and thin.
Time for Jacky to change his plans and get us back on track before our TA truly goes in the toilet. We've already kissed the IBD 100 good-bye for the foreseeable future.
$16.60 pre-market. Hopefully support in the $16.20 range holds <sigh>
Someone should inform him that his math equals one million short shares covered during the last two weeks of October, however we traded a staggering 11 million shares during that same period. So what does he attribute the other 90% of the action to?
Also, according to him, only 25% of the outstanding short interest covers and that is the key fuel for a 150% run up in price? If that is his assertion, then he should be long because when the other 75% covers we should see another 450% appreciation according to his gorilla math.
Along these lines: I think many are going to be amazed when the new short interest numbers come out as I expect them to be as high as they ever have been. The squeeze is still very much on IMO.
slap a similar P/E on CCME as AAPL and the cash is suddenly a similar portion of market cap..
That is exactly where it should be! Now the question is, how to bridge the great divide?!?!? They are going to have to loosen the purse strings to get there IMO.
On a very positive note, as you've pointed out - the institutional ownership is looking stellar. If we can't get a divi, a GS or MS buy rating with a $35 price target will simply have to do ;)
The 20% figure was if they put their cash to work in the form of acquisitions or launching new product lines, etc. not from other forms of investment such as stocks or bonds.
Apple is reinvesting a considerable amount of their cash in research and releases innovative products on a regular basis. They just have the same "problem" as CCME which is they make an un-Godly amount of money :) That said, they have 14% of their market cap in cash as compared to CCME's 30%. CCME is in a high growth market and they should be finding ways to get that cash to work. If they can't find a place for the money, they need to start getting some of it back to the shareholders.
Doing neither is going to keep the stock's valuation lower than it should be.