OTI

[Dimebag]

I don't understand why so many people are so concerned about liquidy when they are supposidly making a long-term investment.

To be so concerned, one must be either:
(1) Not a long-term investor at all, because you anticipate the need or inclination to get out in hurry in the near term, especially if there are a few negative company or share price developments; or
(2) Do not trust your judgement enough to lock your money away for 5 years, and anticipate you will be wrong and need to cash out

A true investor isn't concerned about liquidity because they are buying a stake in the company which they don't anticipate a need or inclination to sell in the near term. "Locking-away" one's money for 5 years plus is what should be in prospect.

As to not trusting one's judgement, I would have thought that if this is the case, investing in the stock market at all is perhaps not such a good idea.

Dimebag

[Dimebag]

PS

This liquidy issue is perhaps one of the biggest reasons that micro-caps have outperformed their larger-cap counterparts by a significant margin for so many years.

Liquidity scares so many buyers away that great growth companies can sell for rediculously low prices.

As the company grows, and the stock goes up, liquidity steadily improves such that more investors are prepared to buy in. As more investors buy in, the stock goes up and liquidity improves and this cycle can prove very profitable for early holders.

The best opportunities are always where you have a fundamentally attractive proposition where the majority of investing folk dare not tread.

Illiquid micro-caps appear to be prime candidates.

[Dimebag]

Cantab

Is that you in there buying up large circa 150,000 shares plus bidding for another 50,000 on the open?

[Halebop]

quote:Originally posted by Dimebag

I don't understand why so many people are so concerned about liquidy when they are supposidly making a long-term investment.

To be so concerned, one must be either:
(1) Not a long-term investor at all, because you anticipate the need or inclination to get out in hurry in the near term, especially if there are a few negative company or share price developments; or
(2) Do not trust your judgement enough to lock your money away for 5 years, and anticipate you will be wrong and need to cash out

A true investor isn't concerned about liquidity because they are buying a stake in the company which they don't anticipate a need or inclination to sell in the near term. "Locking-away" one's money for 5 years plus is what should be in prospect.

As to not trusting one's judgement, I would have thought that if this is the case, investing in the stock market at all is perhaps not such a good idea.

Dimebag

I'll often take an interest in a low liquidity company. But OTI are in a different ballpark. Liquidity is almost non-existent. Over 90% of the 116m shares are in the hands of just 45 investors. The bulk of the 630 shareholders in the last annual report owned few shares - 370 shareholders owned an average of less than 4,000 shares each. Daily volumes are low. This single positve thread about OTI has probably generated enough volume to raise the shareprice all by itself.

If the company is successful liquidity will improve as larger holders move to sell their interests at higher prices. That's fine.

But realistically, a true investor should be concerned about liquidity. Professional long term investors know they make mistakes. Ask Buffett about Berkshire's textile business or US Air or selling Coca Cola in the early 80's when he should have been buying? When you make mistakes in business and investing you need back-up plans and strategies - operationally often called Disaster Recovery Plans. If you are wrong about OTI what is your backup? How do you sell even 250,000 shares in a thin market like that? The good news is it will still be easy to do. The bad news is the results would be hard to stomach.

I'm basically a full time investor although I still do some consulting and have an interest in a software business my partners and I are fostering through a start-up development phase (read: spend money and hope). I'm certainly not the wealthiest guy around (or on this forum) but even I could not invest a worthwhile sum in OTI because the free float is just too small. I'd probably push the shareprice above 20 cents if I wanted a million shares. I couldn't conceivably buy more and expect to purchase at anything resembling great value. God forbid if things went bad and I wanted to realise my loss and dump them.

However what I'd say is this: I am a "true" investor (for what it's worth) and I am concerned about liquidity. I'm not concerned because I think it will reduce my profits. I'm concerned because I want to mitigate losses. As a true (yet very fallible) investor, I know that sometimes this happens, despite my desires and analysis.

[Halebop]

quote:Originally posted by cantab

OTI has a similar distribution of shareholders as ATR. With ATR more than 90% of shares are owned by fewer than 50 holders. The Top 20 own almost 90%.

The ATR register shows 611 out of 1158 shareholders without a marketable parcel and another 451 holders with 1001 to 5000 shares. Only 65 shareholders out of 1158 in total owned more than 5000 shares!

That lack of liquidity stopped some from buying ATR which was great because it made it easier for the rest of us, who back our ourselves, to pick up the shares that much cheaper and easier.

Cantab

Hindsight is a fabulous thing. We are always right! []

[skinny]

Call me cantankerous Cantab but I'm only paid once a month and was hoping to get some more in the previous 13-16c range....couldn't you all have held off

Just kidding - great going and I agree it looks set to break out with sweet FA on the sell side according to the depth charts on access brokerage []

AFC looks to be in a similar boat wrt shareholder concentration, depth and current demand. On Dimebag's comments I'm going to do quite well on these investments, on Halebop's I could get screwed if either dissapoint. Thanks to heaven that returns are log normal!

ps: HB - think I'll start a thread on NZX on professional investing...

[robbo]

Cantab & Dimebag,
Me buy OTI shares. Neveeeerr Not without some derivative options on the sponge cake at any rate[] Yep this thread is getting rather interesting. TRUST skinny to try to put that contrarian brake of his on.
If Skinny keeps braking like that, and with me tailgating him [B)]and everything, I'll end up Skiny's a... and there's much better places to be I'm really sure of that.. [:I][:I]
Oh well, wer're maybe starting to approach getting close to the end game for the next phase of the CONSENSUS VIEW ON ORIENTAL.--OTI--
Can any one else nominate a share, such as OTI-- with a low P.E. of about 4 and Profits at the quantum of OTI,( I could quote shares being currently quoted at $1.10 with similar profits and more problems/issues than OTI...) with OTI's 3 years of increasing earnings per share, in a massively expansionary market( CHINA)--and Europe incidentally..., AND being well entreched in their niche stable market with excellent Contracts, and on-going guaranteed Sales locked in.... AND where Demand massively outstrips Supply, where the biggest expansion for automotive is going to be, with some several years now of Proven excellent Management and Proven Performance, without being involved in exotic new Blue Sky High Tech...with a must have Product: for UNDER 20 Cents......!!! $1.00 in 3 Years. Me says 18 months.
By the way if anyone can nominate Proven ASX performers with 3 years of consistent earnings, at such low P.E's and such High Returns on Capital over 3 years...for UNDER 25 Cents then Pleeeeease[8D]Let me know!!
Such Massively undervalued Quality, like OTI-- with relative little downside cannot stay at this price for ever IMO. As I've said, it may flicker around 15 cents ago for morsels..but North is OTI's logical share price compass bearing IMO

Regards, Robbo.

quote:Originally posted by cantab

Yes Dimebag I'm in there somewherebut I haven't done any buying this morning. Maybe it was Robbo.

[skinny]

Hey ! I'm an economist and we're contrarian by nature...always looking for rain clouds on a sunny day. It makes me downright uncomfortable reading nothing but p-o-s-i-t-i-v-i-t-y.

Robbo - rear ending would be a bad idea, you need to keep your nose clean I reckon, might need it to sniff out the sponge cake at the next OTI meeting

[clearasmud]

I believe and hope OTI will pull back-maybe soon if you guys stop buying!
There next profit result won't be flash.

[Halebop]

quote:Originally posted by skinny

AFC looks to be in a similar boat wrt shareholder concentration, depth and current demand. On Dimebag's comments I'm going to do quite well on these investments, on Halebop's I could get screwed if either dissapoint. Thanks to heaven that returns are log normal!

Well the good news is you always get screwed if a share disapoints. I'm happy to agree there is a compelling, if moderately speculative value opportunity here. I have even toyed with the idea of buying some - not many though, I don't want to be paying 50 cents! I agree on most everything positive people say except (is this becoming a theme?) the extent or probabilities of the risks.

Good luck all.

quote:Originally posted by skinny

ps: HB - think I'll start a thread on NZX on professional investing...

Hey what the!? Could there be such a thing? []


Disclosure: Nil OTI & hardly anything in shares at all at the moment.