Selling BSML
Posted on April 10, 2007
We are sure not smiling about our BSML investment, which started out well and turned out to be our worst investment in over five years. The bottom-line is that we’ve been completely wrong on this stock thus far, and given the company’s actions over the last few days we feel compelled to take our losses here and move on. Surely, we are selling into weakness, a cardinal investment error, but in this case, we really have no choice.
But wait, you may wonder, isn’t this stock undervalued, based on what was written up in the past? Well, yes it most definately is undervalued. And it’s sure been difficult to sell at these cheap prices. However, in order for the value to be realized you need a management team in place that wants and knows how to enhance shareholder value. Over the last few days, though, we have come to the conclusion that BSML management has no idea what they are doing or they have no intention of enhancing shareholder value.
Why the sudden change? Quite simply we were shocked at how sloppy the company’s financials were in the 10-K, to the extent that it now appears is if the company will be restating results to show a loss in the 4th quarter, versus what appeared to be a nice profit. Additionally, yesterday the company suddenly announced quite matter of factly that its shares will be delisted by next week, unless they raise some additional equity. We see absolutely no way the company will be able to raise equity at current prices, and as such do not see the company maintaining its Nasdaq listing. As, we have no intention of holding onto an illiquid stock on the pink sheets, we are compelled to sell.
Can BSML bounce back? We’re sure it can. It has done so in the past. But, for now we’re moving on.
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