There are allegations and rumours that some fund managers have been conspiring together to push weaken stocks to ridiculously low prices so they can get them at dirt cheap prices...
I cant find the source,.. but it's posted around here in one of the other threads.
Perhaps ABS was another victim - that got carried away?
Hey check thsi out
Net Tangible Assets 31/12/06 31/12/05 cents cents
Net tangible assets per share (76.5) 24.1
NTA negative?
Also check out falling operating cashflow (payment to suppliers) and also high investment cashflow (childcare licenses capatilised but not expensed?)
thx
MS
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Also quote from anoterh forum
I am not quite ready to completely forgive Roger Montgomery for CCP. However he definitely helped me stay clear of this dog(ABS)a long time ago.
I always had it in the back of my mind to short this stock but whatever...
The following was sent to Stockval subscribers today.
Today both Eddie Groves’ worst nightmare, and Roger Montgomery’s 4-year prediction, became a reality. The result? ABC Learning Centres’ share price dropped over 60% this morning to $1.40, down from $8.00 in 2006.
As many of you would know, Roger has consistently questioned the impact of ABC’s capital raisings over the past four years on the company's profitability.
In 2006 the declining profitability saw StockVal place a $3.00 valuation on ABC Learning Centres despite its share price trading at around $8.00. The insanity of such a different valuation to the market and other analysts was not lost on journalists at The Sydney Morning Herald, who on April 14, 2006, wrote;
"It would appear a brave call to rate a stock trading at about $8 as worth $3 but that’s what Clime Capital thinks of ABC Learning.
"With most brokers calling the childcare company between $7 and $8, and after a strong share price rise in recent years, Clime says ABC's share price would have to fall about 65 per cent to be of any interest.
"Clime's chief criticism involves ABC's diminishing return on equity from 48 per cent in 2002 to below 11 per cent in 2006, during which time equity raised grew from $10 million a year to $330 million.
"If the return on equity remains at 11 per cent and we adopt a 15 per cent required return, the only sensible price to pay for the business is a discount to the equity in the business," Clime writes, adding its estimate of value is "less than $3".
"If ground level represents value, the share price is hovering somewhere in the stratosphere."
Roger is a firm believer in using StockVal to analyse the entire business and all of its cash flows both in and out. Such a method is not popular amongst private and professional investors, but over long periods of time, should produce results.
I don't know about you anna but I thought this email (I received it too) was a bit over the top. It seems to me Clime was desperate to prove themselves after the CCP debacle. I replied to the mail and asked whether Roger was going to talk about CCP on the show as well. I don't expect to get an answer. I respect Clime's analysis of ABS but it just sounded like a bit of chest beating to me.
All this talk of hedge funds and fund managers conspiring to lower the prices of ABS seems a bit far fetched to me.....Why would anyone go to the trouble and risk to pick up a stock which is looking more and more unlike investment grade anyway...this is all just good media at the moment.
No doubt the stock may have been oversold at $1.15 but why is it unreasonable for the market to undervalue this thing in the current climate, especially since Eddie is refusing to tell about a margin call and the market guidance of this highly leveraged story has been well, a little vague
I'm still getting over the prospect of margin loaning a company with already 100% debt to equity.....and I thought I was a thrill seeker......
I watched the show and must disagree...
If anything it was a shot at the private sector operating in the child care industry. This is a pet topic that has been dogging ABS and the rapid shift in the industry as consequence of the governments lack of commitment and resources..
The comments from some lady invertiewed, who is head of some child care association is in no real position to comment on the viability of ABS business model or debt levels.
The analyst had a more intelligent view but still failed to inpress...
A beat up if you ask my opinion and the price drop today was a classic margin call sell.
Time will tell but I think their is going to be some strong support for the stock at $2.00
Eddy Groves is a very smart and cluey guy (Ex Mckinsey) and the rumours of hedge fund shorting it to wash out the large margins on ABS has merit..
will see.
benwex
There are allegations and rumours that some fund managers have been conspiring together to push weaken stocks to ridiculously low prices so they can get them at dirt cheap prices...
I cant find the source,.. but it's posted around here in one of the other threads.
Perhaps ABS was another victim - that got carried away?
I don't know about you anna but I thought this email (I received it too) was a bit over the top. It seems to me Clime was desperate to prove themselves after the CCP debacle. I replied to the mail and asked whether Roger was going to talk about CCP on the show as well. I don't expect to get an answer. I respect Clime's analysis of ABS but it just sounded like a bit of chest beating to me.
Thanks for the post.
It is nice to see Montgomory's prediction. Why one has to wait 2 years for a catastrophe. Stock market commentary on ANZ by stock val was done at $28. What does Roger's team say about that prediction for ANZ. Wait for 5 years and then say WE SAID IT.
It is a bad sign for many investors to see the share price dived down like that. It is just not the directors but also the accountants should be hung until their brain matter comes more fertilised not to deceive public.
I don't know about you anna but I thought this email (I received it too) was a bit over the top. It seems to me Clime was desperate to prove themselves after the CCP debacle. I replied to the mail and asked whether Roger was going to talk about CCP on the show as well. I don't expect to get an answer. I respect Clime's analysis of ABS but it just sounded like a bit of chest beating to me.
Exactly, this stock is being re-rated where it should be, I wouldn't say sub $2 is cheap as the company continues to go from bad to worse.
ABS is actually a perfect case study in how to take a perfectly good small business and run it into the ground by turning it into a large debt ridden low return business. Someone mentioned earlier that Eddy Groves is a very smart guy. Whatever his smarts are, they don't appear to business related.
Exactly, this stock is being re-rated where it should be, I wouldn't say sub $2 is cheap as the company continues to go from bad to worse.
ABS is actually a perfect case study in how to take a perfectly good small business and run it into the ground by turning it into a large debt ridden low return business. Someone mentioned earlier that Eddy Groves is a very smart guy. Whatever his smarts are, they don't appear to business related.
In case you haven't noticed ABS has trended down since December 14 2006 high of $8.62 and has been in steep decline since Sep2007.
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