Edmundoluk on cagc

Edmundoluk

http://messages.finance.yahoo.com/Business_%26_Finance/Investments/Stocks_%28A_to_Z%29/Stocks_C/threadview?bn=76075&tid=3233&mid=3233

2010 Outlook for CAGC 26 minutes ago Before I write anything else, I need to tell you I am not here to gloat or dance my happy dance. I hold no animosity against any investor. In fact I truly do feel bad for those who didn't heed my warning about the warrant adjustment and stayed with CAGC. Hopefully you have seen my previous posts and know that I only tell it like it is. Now hear me out.

First of all, I'd say that CAGC's 4th quarter operating results are very good when you ignore the warrants. I also overestimated the total of the adjustment charge. But a $6M loss for the quarter is really bad nonetheless. I think CAGC did its best to bury the GAAP numbers and put the non-GAAP numbers upfront. But unfortunately the GAAP numbers are official and there is no way to hide.

That's the not-so-bad part. Now I must be the bearer of bad news once again. I shall note that, as before, I own puts in CAGC and as such, I do benefit from everyone selling and moving the stock price down. But I submit to you that it is going to happen with or without me saying so - I'm not that powerful. I just thought that you should know what you will be stuck with.

Ok, let's talk about the near term first. I don't know how far CAGC will drop today and next week, but I think I have some good guesses. First of all, its GAAP EPS is 40 cents a share. At its height, CAGC was getting a sky-high 30 times PE from investors. So if you multiply that into the 40 cents you get $12. It probably will not get THAT low. There will be many investors who are willing to buy the stock in the teens when it used to be a $32 stock. And initially there will be many who refuse to acknowledge that the GAAP numbers are the official numbers so they keep buying and form a line of support. I'd say the battle line will probably be near the psychologically important $20.

That's only my guess, my speculation. More importantly, what you need to know is, going forward the outlook for this stock is truly not good, GAAP or non-GAAP. I will continue in the next message.