was a time recently when the cmf pumpstagangsta brotherhood was loving this stk to death
My due diligence identified the fact that this company had no barrier to entry and at some point its business would be ravaged by competitors. I am pleased that this DD saved me from buying it at $13 or so, and riding it down to around $5.
However, avoiding this move from $5 to $0.25, is a whole other thing. Avoiding that was just dumb luck. I never would have dreamed it would have fallen apart to this level ...so quickly. Eventually maybe, after a year or so, but in one quarter. WOW. Makes me think something illegal must have been going on in the Management department, or at the least something very, very, unethical.
Anyway, I have owned enough of these investments where my DD did not protect me much, so I feel the pain of any investor that might have been long on this position. The only good news that comes from these events, is that the position soon becomes so small in your portfolio, you will cease to worry about it anymore. Something good can come from almost anything.
Originally Posted by OptsyEagle
sorry to hear about your loss.
i hope that u do get over it.
For them to write off 2/3 of revenues is clearly fraud. How about their auditor, KPMG ... What will happen to them ? Absolutely nothing.
read it again.
Originally Posted by thenegotiator
i misunderstood u.
Sorry, to anyone who got burned by this. It's pretty important to read the financial statements of any stock you're going to invest directly in. Then again it can be hard to understand and analyze the financial statements (and be quick to respond when financial conditions change). Admittedly, that's hard to do. This is the problem with holding individual stocks. You have to watch them so closely!
One thing that's very strange in Poseidon's financial statements is the size of their "Accounts receivable" (amounts owed to them by others). At June 2012, their accounts receivable was $119k versus $120k book value; the accounts receivable was 99% of the company's book value (assets - liabilities). That's, um, very large, and they're having problems collecting that money. That's not good.
At September 2012 accounts receivable became 117% of book value. So at this point the company's value is entirely at the whims of their customers making good on payments. And then suddenly a huge chunk of their accounts receivable went sour; a whopping 29% of their accounts receivable became past due and they took an expense charge.
And then apparently the company informed shareholders that they should not trust the financial statements, and the financials will have to be restated. Whenever you see that, you have to GET OUT.
There's a lawsuit now
"In particular, it was announced that approximately $95 million to $106 million
of the Company's $148.1 million in revenue for the 9 months ended September
30, 2012 should not have been recorded as revenue in the Company's financial
statements; and as a result of recording the foregoing revenues, approximately
$94 million to $102 million of the Company's $125.5 million accounts
receivable as at September 30, 2012 should not have been recorded in the
Company's financial statements as accounts receivable. As a result, the first,
second and third quarter 2012 financial statements (the "Financial Statements")
will be restated and the Company advised investors that they should no longer
rely on the Financial Statements."
Basically sounds like fraud... they're saying, yeah um 80% of our accounts receivable probably shouldn't have been there.
As I mentioned above, the entire book value WAS the accounts receivable (liquidation value of the company)
In fact when they say they over-stated accounts receivable by $100 million, but their BOOK VALUE is only $107 million... uh oh ...
what they're pretty much saying is "looks like we were sloppy on the math or screwed up something, looks like our company is worth about 7% of what we reported before. Oops."
Last edited by james4beach; 2013-02-17 at 06:57 AM.