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(B)(N) PSN Poseidon Concepts Corporation

November 16, 2012

Drama. The “Financial Industry” that so many people – call them “consumers”, and they do – rely on has lost its bearings or “marbles” we said when we were younger and could say what we wanted. Would they care to explain to we hapless “consumers” of their investment risk how a well-regarded company, PSN Poseidon Concepts Corporation, of Alberta, that they bought and sold for $12 a share on Wednesday and for $14-$16 per share for most of the year, should be worth $5 a share on Thursday because, allegedly, the company said that it expected to cut its operating budget next year by 42% because of an expected weakening demand and oversupply, and their expected earnings were expected to decline from the $165 million expected by the analysts to $140-$150 million per year expected by the company. The dividend is $1.08 per share or $88 million per year for an impressive current yield of 21% if not affected by the downturn – dividends are usually cut altogether rather than reduced.

It is well said (Matt Miller, Bloomberg, as reported in The Daily Ticker, November 15, 2012) that “”Billionaires do not become billionaires by getting into a diversified mutual fund or investing in an ETF or investing in the S&P Index Fund. You get rich by building equity in a very concentrated position that is typically one big company.”

Alas, we do not own any of PSN in a Perpetual Bond™. The company has impressive financials with low debt ($72 million) and a net worth of $120 million but the market capitalization is small at under $1 billion (now under $500 million) and the volatility based stop/loss is $3 per share (please see Popoviciu’s Volatility, September 2012) which might not have protected the price in a fast moving market. Moreover, the options market is very “thin” and expensive (please see The Wall Street Put, August 2012) although, obviously, any short position or long puts since Wednesday paid off very handsomely, didn’t they.

Exhibit 1: (B)(N) PSN Poseidon Concepts Corporation – Risk Chart

Poseidon Concepts Corp is a customer-focused provider of safe fluid handling solutions to the oil and natural gas sector across North America.

(Please Click on the Chart to make it larger if required.)

The Risk Price (SF) (Black Line and a step-function) is still at $13.

For more information on RiskWerk, please follow the Tags or Categories attached to this Letter or simply enter Search for additional references to any term that we have used. Related data may be obtained from us for free in a machine readable format by request to RiskWerk@gmail.com.

Disclaimer

Investing in the bond and stock markets has become a highly regulated and litigious industry but despite that, there remains only one effective rule and that is caveat emptor or “buyer beware”. Nothing that we say should be construed by any person as advice or a recommendation to buy, sell, hold or avoid the common stock or bonds of any public company at any time for any purpose. That is the law and we fully support and respect that law and regulation in every jurisdiction without exception and without qualification to the best of our knowledge and ability. We can only tell you what we do and why we do it or have done it and we know nothing at all about the future or the future of stock prices of any company nor why they are what they are, now. The author retains all copyrights to his works in this blog and on this website. The Perpetual Bond®™ is a registered trademark and patented technology of The RiskWerk Company and RiskWerk Limited (“Company”) . The Canada Pension Bond®™ and The Medina Bond®™ are registered trademarks or trademarks of the Company as are the words and phrases “Alpha-smart”, “100% Capital Safety”, “100% Liquidity”, ”price of risk”, “risk price”, and the symbols “(B)”, “(N)” and N*.

One Comment leave one →
  1. April 19, 2013 6:13 PM

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    Like

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