On May 18th, one of our bloggers posted a reprint from an analyst from a small cap network regarding Aphatec. The commentary was that " when a stock climbs up in share valuation on revenues and growth, month after month, quarter after quarter, it's something that I love to see in the markets." For a stock that has yo-yo'd more than a Duncan Yo-Yo, the Yo-Yo of all Yo-Yo's, one has to wonder what this individual was talking about. Granted the stock has had an uptick that some would interpret as a surge, but let's face facts, this stock has had a 52 weeks high of $5.82 and an all-time low of $1.85. To give the impression that all's well that end's well is debatable.
Analysts love to promote a companies stock by emitting optimism. Their hope is to make the public believe that a stock is on the rise, or that it will continue to increase in value. The dissenting opinion usually comes from the short sellers, who are pessimistic because they are skeptics, knowing that management is notorious at self-promoting to extremes. This skepticism is a natural reaction to how a company shows growth when concern is expressed in the public domain. An example would be understanding how modified accounting rules can alter and infuse some life into revenue. An example would be Enron, who inflated their number by using "mark to market" to inflate their valuation, or "revenue sharing," the practice of sharing operating profits with a company's employees, or of sharing the revenues resulting between companies in an alliance.
Many analysts that promote companies in the spine industry have little more than anecdotal knowledge, basing their forecasts on their trust and relationships with a company's management team. Or, they may have heavily invested in this stock themselves. At best these proclamations are intended to generate enthusiasms for the investor. But what if hypothetically a publicly traded company had increased its revenue stream by going to a POD model, knowing that there are many questions left unanswered whether this is truly a legal business model. Would an investor feel that they were being deceived by the company and their management team if they were not informed? What if a law was enacted that declared all POD's illegal, would the stock and revenue plummet? Would the corporation have had represented itself in good faith by being honest, sound and efficient with its investors?
So in closing, before one blogs about one's greatness, with the intent of going long, one has to wonder whether this individual has any clue to the dynamics of a specific company, the market, let alone the management team. You know what TSB is says;
Nibblin' on sponge cake, watchin' the sun bake
All of those tourists covered with oil, strummin' by six string
On my front porch swing, smell those shrimp they're beginning to boil
Wastin' away in Margaritaville...................