I am puzzeled as to why we can see the upside in the company but the sellers can not or are simply dismissing it.
If Mr. Lee can convince us of the upside in this company why cant he convince his Chinese investors? --thebear37
Da bears!
Before I saw this in the PM you'd sent me, I actually was going to put a footnote to what I'd said yesterday. But its been a busy day.
My grasp of companies like Belmont and seed investors is extremely slim. But it seems the underlying concept of what they do is very simple, and essentially amounts to a strata of investing that focuses on getting in on a company upstream of where individual investors like us come in. I suspect, just like individuals, they've honed in on the types of investments that they feel will offer them the best returns and tend to work within those parameters. Likewise, as here in the small cap Chinese plays we're focused on, I suspect there's virtually no end to the number of upstart companies that are hardpressed to borrow money. And just like investors here will sell off a good company like BIDU because it's past that hyper growth stage that people on the CGS are looking for, my hunch is seed investors and the like will dump good companies like SIAF so they can take their fivefold or tenfold profits and plunk it back down into another upstart company with the hopes of repeating those gains again. I suspect, that is, that even though SIAF is going to go a lot higher, if they sell at .60 and that's a 5 bagger for them, they're problably thinking that they can repeat those gains faster with another company rather than waiting for SAIF's share price to get to $3. And from what others have said, it sounds like many of these seed investors might be making more like 10, 20, 30 or more times their original investment when they sell it at the .50 to .60 range. So that means they've got to judge whether or not SIAF's shareprice is more likely to get up to $6, $12 and $18 respectively in the next 18-24 month period versus the likelihood of that happening with one of the new upstarts that are knocking at their door for more capital.
Like you, it seems rather bizarre to me for people to be bailing out at these levels. But it's not if you've already achieved those kinds of gains and are honing your investment skills to catch companies that are at an extremely early stage in their grow. Moroever, just as you hear a lot people on these boards say, I suspect for the upstarts that look the most promising, these seed investors probably allow a hefty portion of their free shares to remain invested. It's just they've got so many more shares to work with than guys like us, they can sell a ton of them and still have a decent size position left. "Play money" for them, perhaps.
Anyway, I think it's just a matter of perspective and the niche one wants to specialize in more than it is a failure of a company's CEO enticing them to keep their money invested. Others with direct experience in these matters will, hopefully, correct me if I'm wrong. But since we see this same phenomenon going on here on the CGS boards within the band of stocks we watch, it stands to reason that it would be mirrored again for those who have the large capital to fund upstarts. This doesn't mean that at times such investors might catch wind of "something bad in Denmark" going on and get out for that reason. But it seems the above, "innocent", scenario also accounts for why such seed investors will unload at what seems like give away prices.
Steve
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