3SOF

Quote from: Ramsburg on November 06, 2007, 08:23:35 AM
Because of a technical issue on David's internet connection he was not able to publish this update.

The instructions for this position is: HOLD

Yes, tough day yesterday. Sapo ADSL was able to fix the problem today around 10 AM (Lisbon time), it is working fine now.

As for ETLT.OB, I'm disappointed to see the stock back to my buying price of $0.7. I don't understand why the very attractive valuation doesn't attract more buyers, but I'll wait for Q3 earnings before taking any possible action.

I'm going to say it again: ETLT.OB might be my teacher on the "low P/E doesn't always mean a bargain" lesson. It can also be a liberator, because if finding good picks required just simple math I would have to find something more interesting to do with my life. Fortunately it isn't as easy and truly understanding businesses and their prospects seem to be the key for long term and sustainable success in the stock market. Not just math, but art.

Anyway, I'll keep holding ETLT.OB some more time, I want to see what we get in the Q3 earnings release, which hopefully will be on schedule, that is, on or before November 15.

Arrggghhh, here comes a punch in the stomach

ETLT.OB not even had the courage or decency to issue a press release, at least showing a strategy or expectations for the future. It released 3rd quarter earnings just through an SEC 10-Q form, and they were bad:

- Revenue declined 44% from Q3 2006;
- EPS still was $0.04, making the stock "cheap" from an EPS multiple perspective, but with this sharp revenue decline I distrust the quality of these earnings;
- They still claim to have $45.6 M in cash (while the market cap is $31 M ), the problem is:

«The Company has cash and bank balances of $45,634,503 which is more than sufficient to cover its PRC operations. However, if the  Company is to expand outside the PRC, as it anticipates doing, or pay its non-PRC obligations, it will have to sell additional shares of its stock or borrow funds from third parties. Unless it is able to either borrow funds or sell additional shares, it will have insufficient resources to carry out its business objectives outside the PRC for the next twelve (12) months.»

Why can't ETLT.OB convert its Remingbi currency into USD or Euros? Everybody does it. This is pretty weird, I don't know what to think of it. This issue explains why ETLT.OB trades "below cash". The market doesn't believe they actually have the money.

Once I've read a study showing low P/E stocks beat high P/E stocks over the long term. But the "below 5" earnings multiple group also didn't do well.

ETLT.OB taught me that a super low earnings multiple, say, below 7, isn't good, it is actually an alarm bell. If it's too good to be true, it probably is.

I need to expand my fundamental analysis understanding and go beyond an earnings multiple comparison analysis. The earnings multiple is just a part, perhaps a small part, of understanding long term investments in stocks. I already knew this, but I got more evidence here.

Unfortunately, every lesson the stock market teaches me has a price. The tutor is presenting the bill, and I'll pay it right away, by selling ETLT.OB today for a loss.

The Trading Plan for ETLT.OB is:

SELL.

David,

Any suggestions? I was not filled at my .61 price and now it has dropped even further. My guess is the 3SOF swing made it drop so quickly. Any reason to hold to get to my mental price of at least .61 or let it go ?

It seems every one of these .ob stocks we go after eventually fall like a rock, well maybe AMRE.ob did ok! 

thanks, Brad

Quote from: basanlas on November 09, 2007, 09:45:54 AM
David,

Any suggestions? I was not filled at my .61 price and now it has dropped even further. My guess is the 3SOF swing made it drop so quickly. Any reason to hold to get to my mental price of at least .61 or let it go ?

It seems every one of these .ob stocks we go after eventually fall like a rock, well maybe AMRE.ob did ok! 

thanks, Brad

No suggestions on short term timing Brad, sorry. Good luck.

You're right, OTCBB's have too many tricks ... can't trust them, unless they're about to move to the AMEX or Nasdaq, like GSB did. realcoolhead was right on this, as usual.

David,

I think that OTCBB stocks are to avoid: they can run fast, but too easily can destroy the money we hardly earn :-)

cheers,

tera

David, I am going to MARK THESE WORDS for you this time! 

Well, we all live to learn, don't we?

Quote from: David Randolph on November 09, 2007, 10:00:28 AM

You're right, OTCBB's have too many tricks ... can't trust them, unless they're about to move to the AMEX or Nasdaq, like GSB did. realcoolhead was right on this, as usual.

I think lessons learned from ETLT will be lost if CHME and UTVG both .OB are in the portfolio. Its time that either we have a separate portfolio for them or not have them at all. I hope David will do something about it.

The fact that CHME is at -17.53 UTVG at -11.5 would you say these two in particular are also not reliable not because of their fundamentals but simply by nature of the beast (.ob)?
Do you guys think these would come back up to at least replace both the -17+ and -11+ percentages lost respectably?
I don't have large positions on these anyway but am concerned more now that I am reading this sentiment from you guys. Specially since I was not filled on my ETLT sell order and this Friday I bought a small position on CHME on the dip thinking this should come back up pretty strong based on the valuation that David has shared with us on this one.

I am not sure and UTVG and CHME may be multi beggars. For sure we had similar projections for .pk but lessons were learned and .pk were for ever banished from the Main. Its time that main should not have .OB in the main or we need to have different portfolio for them.

Quote from: stocky on November 10, 2007, 09:22:30 PM
I am not sure and UTVG and CHME may be multi beggars. For sure we had similar projections for .pk but lessons were learned and .pk were for ever banished from the Main. Its time that main should not have .OB in the main or we need to have different portfolio for them.

I think more profit has been made than has been lost on 3SOF trading .OB stocks, so eliminatinting them outright might be too harsh a solution. 

I lost a good chunk of change on ETLT.OB recently yet still I say this as I have made more than I have lost on .OB stocks.  I guess what we cant know makes sense is the long term investment in .OB stocks.  Certainly the profits I am talking about were from trading them, not buy and hold.  Yet as we have observed, there are examples where that woudl have been a great strategy, like AOBO.OB = AOB.   So in the end I will gladly defer to David's judgement on the remaining .OB stocks and any others he decided to add.   

When AOBO.OB became AOB, or when we got GSB , these are the case of .OB graduating to Amex. Now that is a fundamental change and once they are Amex listed, things changes. I still think that should be covered but the risk profile suggest to be in a different portfolio. Its for some very good reason that these stocks are traded as .OB. Also the main portfolio is not a trading but a 3 yr buy and hold.

David or anyone else
I know that the experience on ETLT was poor but looking at it now, its seems the valuation is totally absurd. It pulled in EPS of 14.1 c close to what David said 6 months ago[ d SAID 15C AS A GUESS ]
It could be at 10 c for Q1 based on subsequent events alone....ie stuff that went on between end of 2007  and release of results last week ...the valuation at 1.40 per share and some brilliant associated co investmments makes this a potential killer stock

any views?

LJ8

This really requires a re think

Take a look at the prelim results for Q1 2008 [which they have never reported in the past].
On their website under reports....up 72% I think and thats excluding so many other income revenues in Q1
Amazing..s'be about 7-8 c per share for the first Q. Just came out today and not posted to any news wires etc. See Yahoo mess board for details.

http://www.eternaltechs.com/news.asp