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(B)(N) NUAN Nuance Communications

November 27, 2013
Alone In The Markets

Somebody Left Their Money Alone In The Market.

Drama. We’ve been in the markets long enough to know that everything that’s ever been said about the “markets” is true. And the bottom line is that we should never leave our money alone in the market.

However, what is seldom said is that the markets are fair and the reason that they are fair is that they do not pretend to be anything other than what they are.

Investors who left their money alone in Nuance Communications did not know the “price of risk” and are now hanging on for the “dead cat bounce” to make a few bucks before leaving or the “double-up and pray” strategy to avoid near-term “value traps” for longer term “investors” (The Street, November 27, 2013, How to Profit From Nuance’s Crash).

Indeed. Had they paid attention sooner, they wouldn’t have to look for their money. It would find them.

An investment is just and only the purchase of risk, and the risk is that we might not get our money back or obtain a hopeful return above the rate of inflation, which is just another way of not getting our money back. And like anything else that we might want to buy, we ought to know the price of it, that is, we ought to know the “price of risk“.

Safety First

Safety First Or It’s Just Salvage

An investment is not an opportunity to grab somebody else’s money because we got there sooner, or later, or we “saw the future” before they did.

Nor is the company responsible for the adventures that we might suppose of it.

We bought and held Nuance Communications between $12 and $18 in 2009 and early 2010 (and briefly at $25 in 2011, Red line Stock Price (SP) above the Black line Risk Price (SF)) when we sold our interest because and only because the “price of risk” exceeded the stock price. If other investors are not willing to pay the price of risk, then neither are we for the obvious reasons – who is going to buy it from us at a higher price if they won’t even pay the price of risk now? Please see Exhibit 1 below.

Looking For Their Money

Still Out Looking For Their Money

The price of risk is currently $22 and possibly declining but it has been that or more for at least two years. Our estimate of the downside in the stock price due to the demonstrated volatility is minus ($3) in the next quarter, so we would not be surprised by any price between the current $13 and $10 to $16, none of which are above the price of risk.

We’ll just have to wait for the next call but we’ve also noticed that there is more than one stock in the market and we can buy those while other investors are out looking for their money.

For more information on the theory and practice, please see the references below.

Exhibit 1: (B)(N) NUAN Nuance Communications – Risk Price Chart

(B)(N) NUAN Nuance Communications Incorporated

(B)(N) NUAN Nuance Communications Incorporated

Nuance Communications Incorporated offers voice and language solutions for businesses and consumers internationally.

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

From the Company: Nuance Communications, Inc. provides voice and language solutions for businesses and consumers worldwide. It provides dictation and transcription solutions and services that enable platforms to generate and distribute clinical documentation; clinical documentation improvement programs; and speech recognition solutions for radiology, cardiology, pathology, and related specialties enabling healthcare providers to dictate, edit, and sign reports without manual transcription. The company also offers mobile and consumer solutions comprising voice control and text-to-speech solutions; dictation applications; predictive text technologies; mobile messaging services; and dictation, Web search, and voicemail-to-text services for use in phones, cars, tablets, desktop and portable computers, personal navigation devices, and other consumer electronics. In addition, it provides customer service business intelligence and authentication solutions, such as speech recognition, natural language understanding, text-to-speech, biometric voice recognition, and analytics for enterprises in the telecommunications, financial services, travel, entertainment, and government sectors to support, understand, and communicate with customers. Further, the company offers document imaging, print management, and PDF solutions to printer manufacturers, home offices, small businesses, and enterprise customers; and software development toolkits to independent software vendors, as well as licenses its software to printer manufacturers; and Tweddle Connect, an application and content service delivery platform for in-car infotainment systems. Nuance Communications, Inc. markets and sells its products through direct sales force and a network of resellers, and its e-commerce Website. The company was formerly known as ScanSoft, Inc. and changed its name to Nuance Communications, Inc. in October 2005. Nuance Communications, Inc. was founded in 1992, has 12,000 employees and is headquartered in Burlington, Massachusetts.

For more information and additional references to the theory, please see our recent Post, The RiskWerk Company Glossary.

And for more on what risk averse investing has done for us this year, please see our recent Posts on The S&P TSX “Hangdog” Market or The Wall Street Put or specialty markets such as The Dow Transports & Utilities or (B)(N) The Woods Are Burning, or for the real class actionLa Dolce Vita – Let’s Do Prada! and It’s For You, Dear on the smartphone business.

And for more stocks at high prices, The World’s Most Talked About Stocks or Earnings Don’t Matter – NASDAQ 100.

And for more on what’s Working in AmericaBig OilShopping in America or Banking in America, to name just a few.

Postscript

We are The RiskWerk Company and care not a jot for mutual funds, hedge funds, “alternative investments”, the “risk/reward equation” and every other unprovable artifact of investment lore. We have just one product

The Perpetual Bond
Alpha-smart with 100% Capital Safety and 100% Liquidity
Guaranteed
With No Fees and No Loads on Capital

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*.

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