Forum Archive Index - May 2002

["Herbert Ramsay" <herbertramsay@hotmail.com>]

I've been keeping an eye on SPE as well. I think it's main problem is the 
large number of shares on issue - about 300 million. To earn 0.1 cents per 
share for the full year, it would have to achieve an after tax profit of 
about $300000. That would give it a price/earnings ratio of about 15 at its 
current share price, which isn't a very low price/earnings ratio. Its latest 
interim after tax profit was $40000, down from $120000 in the previous 
corresponding period. Therefore it doesn't seem very likely that it will 
earn $300000 after tax this year, especially as it made a loss last year. 
Also its current share price is still above its net tangible asset backing 
of about 1.2 cents per share. The fact that it hasn't made any announcements 
for a while could well be a bad sign. I think its on the lookout for other 
investments. I would wait for its share price to fall below its net tangible 
asset backing before buying. In the absence of any significant profits, the 
net tangible asset backing is all you've got to go on (apart from the hype 
of course).


>From: "John Wedde" <John.Wedde@weltec.ac.nz>
>Reply-To: sharechat@sharechat.co.nz
>To: <sharechat@sharechat.co.nz>
>Subject: Re: [sharechat] Spectrum
>Date: Tue, 21 May 2002 13:34:03 +1200
>
>Hi Jefley,
>
>No offence taken.
>
>I'm interested however in how everybody seems to knock this stock but
>nobody ever gives any Fundamentalist reasoning for this.
>
>Technically, I'm sure Phaedrus would agree, there is not a lot you can
>say about Spectrum because of its illiquidity. From a Fundamental point
>of view however, its subsidiary Kinetiq seems to be at the cutting edge.
>Remember NZ was one of the first countries to deregulate its electricity
>sector and Kinetiq cut their teeth here. They seem subsequently to have
>made good inroads into the Canadian and American markets with their
>energy management software, although we havn't heard any news recently.
>Their last financial report [6 months to December 2001] actually showed
>a REAL net profit, ie AFTER, not before ITDA!  So why does the share
>always get knocked in forums such as this?
>
>I know all about ramping, but are there not also people out there who
>do the opposite to try and move the price of a share downwards in order
>to get in at a good low price? Jefley, I'm not suggesting this is your
>motive here!
>
>As a Contrarian I still see Spectrum as a company with considerable
>potential. Of course it's speculative, and I'm prepared to loose all I
>have invested if my hunches about this stock prove wrong.
>
>And speaking of dogs, what about "The Dogs Of The Dow"? As a contrarian
>investment strategy I'm sure this one has proved very profitable for
>many.
>
>Cheers,
>John
>
>
>
> >>> jefley@xtra.co.nz Tuesday, 21 May 2002 9:54:50 a.m. >>>
>Below my bottom-drawer of 'verging on reluctant investments', I have a
>
>kennel for the dogs.  House rule is no more than three dogs at a time.
>But
>I am aware that this is a very poor (make that extremely poor)
>investment
>strategy -- sick dogs should be put down.
>
>I'm getting (marginally) better at redeeming bad decisions before they
>
>become too expensive or hang around for so long that they start to
>smell,
>but sometimes the loss seems too great to deal with -- mainly because I
>
>watched the slide like a rabbit paralysed by oncoming headlights.
>
>Are you sure that SPE is worth keeping?  Isn't there anything else that
>
>strikes you as a better investment?  Hanging on to a mistake for a
>month
>seems reasonable, but tying up the money for years is bad practice.  --
>I
>probably qualify as an expert in bad practice so please don't be
>offended
>if this sounds pompous ...
>
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