Forum Archive Index - July 2000

["Mike Hudson" <mikehudson@clear.net.nz>]

At the risk of being labelled a cynic again (I would prefer to be called a sceptic) I must put myself in Nick's camp. I don't think I would qualify to be considered either to be still in my nappies or to be naive having been involved in stock markets for over 30 years.

 

There may not be ramping going on here but there is more than a whiff of hype. Whilst on the subject on ramping if anyone doesn't believe that it is prevalent in the penny dreadful (there, I used that term again) sector of the market then they truly are naive.

 

I received some information on RMG from a broker headed "Speculative Buy" On that basis, with greed getting the better of fear I bought 30k shares but with eyes wide open knowing that I could either double it or halve it in short order.

 

I confess that I have not looked closely at the fundamentals as some have (this is a punting stock so they don't matter too much) but a cursory look seems to show that the company is trading at a p/e of around 35 for the year ended 30th June 2000 and a projected p/e of around 17 for 2001; not to bad if, and IMO it is a big if, the numbers can be met.

 

No doubt the projections assume that the management can

a) Successfully integrate the culture and processes of 16 disparate whilst keeping the people on side and the customers happy

b) The development os a single IT system across the group

 

Having myself being involved in managing similar mergers I know how difficult they can be and I also know that managers always underestimate staff dissatisfaction and customer attrition in these situations.

 

Having said that, RMG may be spectacularly successful and we could all become rich but I doubt it. If I can get out at 45 cents in next couple of months I will be more than happy.

 

Cheers

Mike H

 

PS There is no need to get personal, everybody is entitled to express their point of view; that is what this forum is supposed to be about.