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MCE - Matrix Composites & Engineering

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Stop at 3.39

Intrinsic Value said:
I just can't fathom this stock. Running very hard at the moment.
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Probably should just leave it alone then and see if you can get a feel for it.
There's not much to be excited about fundamentally and as SKC pointed out if a director has just offloaded 3.4 million dollars worth then it hardly likly they are about to announce a great new contract!!!
 

May be he just needed to pay some school fees...

It's a hypothetical trade by the way as there isn't a lot of technical reason to go short at the moment.
 
Michael Gable, of Novus Capital, was spruiking this one on YMYC Thurs night - said in his opinion the downtrend was over and the company had great prospects. He said a solid break above $3.50 could see it go to $6. FWIW.
 
skc said:
May be he just needed to pay some school fees...

It's a hypothetical trade by the way as there isn't a lot of technical reason to go short at the moment.
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So as a tech analyst where do you think it is going short term and medium term?
 

I bet R Montgomery wont be saying much about MCE. I reckon it cost him big time because the release of his Skaffold product was almost in line with the crash of MCE. A lot of people who may have bought in to Skaffold i reckon didnt because of MCE. He can say what he likes but he over spruiked MCE. Maybe he has learnt a lesson there.
 
He may claim he bought it in large quantities at $2.80 if it keeps rising. Watch this space.
 

I haven't seen him on Switzer for a long time and I don't expect to see him on there again for quite some time yet.
 
Roger Montgomery is full of ****. Raved on about MCE begin worth $12 told everyone to buy it then didn't comment on MCE when it was $3 for the last 6 months like the stock didn't exisit.
 
fanger said:
Roger Montgomery is full of ****. Raved on about MCE begin worth $12 told everyone to buy it then didn't comment on MCE when it was $3 for the last 6 months like the stock didn't exisit.
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I think Skaffold has it valued now at $1.70
 
fanger said:
Roger Montgomery is full of ****. Raved on about MCE begin worth $12 told everyone to buy it then didn't comment on MCE when it was $3 for the last 6 months like the stock didn't exisit.
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I'm sure that many reading this thread will have already seen RG's comments on his blog from 24/08/11:

What is the value of a company that wakes up to find it has sold very little or even nothing in the last six months? My very long-term outlook for the price of oil hasn’t changed, but I can make the argument that the shares of Matrix C&E cannot currently be valued as a going concern any more confidently than I can a speculative exploration company.

While its a very harsh interpretation and its not the only interpretation, there are things to be concerned about.

Before I go into what disappointed me about the result, let me make an observation about the short term share price action. It appears that many short term investors could be overreacting to the report. Management are very confident that they will win new business and if they do, the share price represents and opportunity.

...

Prior to those comments, in April in fact, I noted we had participated in the capital raising at $8.50. But our holdings were small and hadn’t exceeded 1% of our portfolio because of our concerns about cash flow. You may also remember I demonstrated declining intrinsic values for Matrix in the future, which triggered some concerned responses. You really do need to understand the business, and the benefits of diversification.

http://blog.rogermontgomery.com/what-are-our-thoughts-on-mces-results-and-big-air/

​

How stupid does this person think I am? (pretty stupid it turns out!). He reckons that even after participating in the capital raising at $8.50, MCE still only represented less than 1% of his portfolio. What kind of portfolio is that? Does Skaffold help an investor determine capital allocation - because I would love to know how he decided to have a stock in his portfolio that represents less than 1% of his investment.

The guy is a clown. He's blown up before and his episode with MCE demonstrates he has the potential to blow up again.
 
Yes Roger Montgomery is a clown but he only gos on YMTC and shows like that to drum up business for himself. He will shout about all the stocks he picked that went up but won't mention the stocks he picked that get hammered. If we went off his ridiculous stock valuations the market would be lucky to be 2500 points.
 
zac said:
I think Skaffold has it valued now at $1.70
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Incredible. Why anyone listens to this guy is beyond me. How on Earth does a company go from having an IV North of $10 to $1.70 in the space of about 12 months. Has anything materially changed wrt MCE over the last 12 months or is it just that a) RM's model is flawed b) he overestimated growth (value investors should be wary of growth under the best conditions, let alone for a contracting business). Not to mention MoS, a change in IV of such magnitude blows the theory of buying with a MoS out of the water.

Doesn't he advocate buying companies that display such "bright prospects" that even if the stock market was switched off for 5 years you wouldn't care.
 

I have defended him in the past and indeed I have bought a few stocks that he recommended and did well out of them.

But he did himself in on the whole MCE affair. It showed him up as a snake oil salesman and someone who couldn't be trusted. It also threw into play his whole ratings rubbish system.

Anytime a stock goes down that he holds he tells you he sold it last week. WTF. Or it only represented a small percentage of his portfolio. I would really love to see his results for the last year from his RM fund. That is the only true test of his methods.
 

McLovin,

How should an investor value a business like MCE? I am all ears

Cheers

Oddson
 
skc said:
It's a hypothetical trade by the way as there isn't a lot of technical reason to go short at the moment.
Click to expand...

Yeah I know, I figure that if it's going to go it should keep going. Getting stopped out at 3.39 would probably confirm the basing pattern is still in play so I'd still 11% up there so happy enough.

The blow off low seemed pretty bullish after their loss announcement, the probability is that it should trend higher according to my retarded technical analysis. (feel free to trash me on that!!)

Fundamentally MCEs forward book is pretty empty, however, you'd think it's due given the environment, the AU$ is probably making it unable to compete for international contracts. That seems to be turning which would favour it also.

It's difficult to value as it is a bit like an investment bank that can be making a fortune during very active M&A times etc but then be dormant and perform very averagely during times of credit restraint etc.

So it's a trader and the techies could do well with it as it's movements are tradable regardless of how valuable one may speculate it is after one has filled ones pockets with it and subsequently recommended it to ones flock and to people who can bare to what the big goofball on SKY Business regularly salivating over Legends like Roger and John Hewson on his program.

Remembering John Hewson lost the unlosable election and then went on to chair a company called Natural Fuel Ltd which floated on the ASX with a 14% loss on its first day, then continued south till it was utterly bankrupt, without a pause!! I’ve never seen a float(sink) quite like it.

The Switzer is painful to watch most of the time, I can't for the life of me work out why he is even on it!
Maybe he does it for free!
I'm pretty sure he is the guy who plays big bird on sesame street for his day job. He has the same street smart quality when he pears down into the camera and offers up his pearls of wisdom.

Peanuts any one?
 
odds-on said:
McLovin,

How should an investor value a business like MCE? I am all ears

Cheers

Oddson
Click to expand...

How do you usually value a business?

MCE is a difficult business to value in the current period. RM's model is too simplistic, it assumes that the status quo today will not change. While that might be true for some businesses it certainly isn't for the majority.
 

From what i have read about MCE I would use price to sales ratio and some good news announcement. Just interested in other investors methods - especially as the iv has jumped around so much.

Cheers

Oddson
 
odds-on said:
From what i have read about MCE I would use price to sales ratio and some good news announcement. Just interested in other investors methods - especially as the iv has jumped around so much.

Cheers

Oddson
Click to expand...

Yours is probably a more sensible way of trying to estimate a value than RM's. At least you recognise that IV in a company like MCE is ephemeral. As notting said, it's a difficult company to value because earnings can jump around. If you believe that oil prices will continue to climb then it's probably got a higher value. There does seem to be a lot of bad news in the price. Personally, I think the company is in the right place at the right time and seems to be pretty well run, even with its current growing pains.

The biggest issue I have with RM is that he preaches long term investing, but then can slash the company's IV by 80-90% (How can you be so wrong in such a short period of time?). To me, that would indicate he got something wrong with the original analysis. We all make mistakes and I've had some shockers but then again I'm not on TV trying to sell my system. He should at least say he got it wrong.

I use a DCF and PE ratio to value companies but in the case of MCE I tend to see it as more at the speculative end and any DCF is going to be extremely difficult.
 

Isn't he up because he was in cash. Probably his best investment!
 
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