Wednesday, October 14, 2009

Update on Q&A with Alloy Steel International

I mentioned this in the comment thread of a previous post, but for those who missed it,

The list of questions ended up being fairly long. Gene [Kostecki, AYSI's CEO] wrote back to say that he and Alan [Winduss, the company's CFO] planned to try to answer all the questions by midweek next week. In light of that time frame, I am going to revise my previous comment about not placing any trades until I post their response. I am going to place additional limit buy orders today but I won't modify them if they don't fill until after I have posted AYSI's responses to the questions. The salient point remains that I won't be buying or selling AYSI based on answers received from the company before posting them here.

I put in a GTC limit order in the low 2's this morning, but obviously didn't get it filled today, given today's price action. Speaking of which: commenter J.K. (who, as far as I know, is the only reader to have invested in AYSI after reading about it here), sold his shares at around $2.70 recently, because he felt that the chart suggested the stock would pull back below $2 in the near future. I've held (and added a tiny bit more) because I don't think the stock will drop below $2 before earnings are released absent materially negative news, and I don't want to risk having the stock run away from me if additional positive news is released (e.g., a big supply deal with another multinational mining company).

Essentially, J.K. feels the stock's near-term trajectory will be driven by technical factors and I think it will continue to be driven by fundamentals. It will be interesting to see which one of us turns out to be correct over the next couple of months.


JK said...

More important to me than the specific price AYSI hits, is price stabilization. If it stabilizes at this level for a few months, I don't have a problem buying back at these levels. Any time you have a big move up like this, there is a big risk of a big move down, due to overexuberance and profit taking. Look at that last spike in 2008. Not that I think it will go as far down this time, but right now the price is based too much on future events and I think technicals could easily rule the day. Because of that strong possibility, I decided to lock in profits for now and keep this on my radar. The chances for a big move downward are larger than the chances for another big move upward, IMO.

I'll risk making an ass out of myself and say AYSI could hit 2.00 by this time in Nov. But if it goes to the moon, I'll be happy for you.

JK said...

BTW, how about that 10,000?

I remember during the beginning of the bounceback I said somewhere on this blog or in a PM to you that the rally could hit 11,000 before it drops back off. That is looking more and more likely. Might get 12,000+ out of this rally. Either way, looks bubbly. Those of us on the ground know not much has changed, and recovery efforts have been misdirected. It will probably take a prolonged downturn before the government gets serious about turning the country around. They seem to think this is a big game for now.

Or perhaps my pessimism is just a result of my being closer to those so called lagging indicators than whatever Bernanke sees up on Mount Olympus.

DaveinHackensack said...

I've got a limit order in the low 2's, so you can be happy for me if it goes to $2 by this time November as well. Would you be back in at $2, or are you holding out for a lower re-entry point?

DaveinHackensack said...

An analyst on Bloomberg TV (I forget which, probably more than one of them) said that, essentially, all the liquidity has flowed into financial assets, rather than into the real economy. The market valuations certainly don't look plausible here, particularly given consensus expectations of an anemic recovery. I am going to sell more stuff I'm not enthusiastic about into this rally and open more short positions.

JK said...

Another Bloomberg watcher? I never watched CNBC again after I found Bloomberg (well ok, the occasional Cramer show. The guy is entertaining, if often wrong). Its like the difference between a PBS documentary and Oprah, in a good way. Much more serious. If John Stewart was right about one thing, it is the way CNBC talking heads can act like groupies for whatever "expert" they talk to.

I'm not putting any limit orders in yet...what price I buy will be determined by the severeness of the inevitable correction. I won't try to catch a steep falling knive if it is not at a multi year support level -as I did successfully with RDY- but if it pulls back slowly and easily I would enter at a higher price. Chances are I will hold out for a significantly lower entry point than 2.00 unless it stays in the 2.00s for significant time and establishes solid support in that range (read- becomes stable).

DaveinHackensack said...

Yeah, same here: no going back to CNBC after getting Bloomberg with our new cable deal.

germaine said...

I also bought some aysi after reading about it on The Hackensack
in December. Still holding it.

DaveinHackensack said...

Glad to hear you got in at such a low price, Germaine, and that you had the fortitude to hang in there.