Muscle Pharm Corporation (MSLPQ)

[Rhenarium]

I get the range aspect of your post, and it makes perfect sense. Buy when underpriced, sell when overpriced, fairly priced could be considered a grey area.

But why are you looking to sell only 25% of your MSLP holdings if it's already slightly overpriced? Do you expect it to become MORE overpriced in the future (i.e., "markets are irrational, I might as well profit from it")? Or do you expect "current factors" to change such that your estimate of its fair price rises? In which case, shouldn't those expectations be factored into your estimate of CURRENT fair value - i.e., isn't that why you would keep 75% of your holdings?

What seems to be missing sometimes from your posts is recognition of the fact that markets are forward-looking. Is that intentional - i.e., are you consciously discounting "the future" in your valuation of the company?

This sentence stands out particularly:

I doubt this company deserves a PE of 40 with forecasted 2014 earnings of $.50 share and revenues of $200m.

The primary drivers of PE are not earnings and revenue. They are earnings and revenue GROWTH. And MSLP has more than enough earnings and revenue growth to warrant a PE of 40 (cough, NFLX, cough, AMZN, cough). MSLP will presumably provide 2015 EPS guidance in January. What do you think it will be?

Ditto for "fair value is 1x revenue". THERE IS NO SUCH RULE! It sort of depends on the company, don't it? The industry average is higher than 1x, and MSLP's growth rate is FAR higher than industry average. Hence if the company were sold for 1x revenue management would be hit with a slew of lawsuits (which would, admittedly, most likely come to nothing..) for breach of fidicuary responsibility. If you disagree with that, I would have to disagree with YOU, good sir, and most vehemently. If you agree that fair value for MSLP SHOULD, all other things being equal, be higher than 1x - but is brought down to 1x because of MSLP-specific baggage like SEC investigation, Pyatt, sordid history, etc. - then I grok you.