Open Letter to GMXR Shareholders...
Research Intended to Help Investors
Please don't take any of my previous posts regarding GMXR personally. I realize that when someone questions a company's fundamentals, valuation, business plan, management team, etc there are bound to be those who take it personally. Nobody likes to hear negative words about one’s investment. Let's face it, most have invested in GMXR because they think it is going higher. So someone like me who posts negative remarks about GMXR is viewed as a basher or someone with ulterior motives (short the stock.)
I can assure everyone that I am not short the stock. I have no ulterior motives.
My ONLY motive is to point out the fact that by comparing GMXR with other companies (benchmarking) I have determined that
GMXR is overvalued in relation to other companies (most notable ARD.) I first wrote about this overvaluation/imbalance on December 17, 2005, when I commented, "I have no doubt that ARD valuation in terms of share price will exceed that of GMXR in the near future as investors recognize the superior values and fundamentals." At that time, GMXR was priced at $36.69 and ARD was priced at $28.75. In other words, GMXR shares were valued at a 27.6% premium to ARD shares.
Today ARD shares trade at $29.71 and GMXR shares trade at
$28.48. Not only has GMXR lost 22.3% of its value while ARD has risen 3.3% since December 17, 2005 but ARD also has exceeded the share price of GMXR as I projected.
GMXR will trend lower (longterm) barring multiple hurricanes in the Gulf of Mexico. Note that the macro picture of NG is not good. At the same time we can expect ARD to trend higher: I have a $60 price target.
GMXR is not the first company I have been critical of regarding valuation. In July of 2005, I spent considerable time and effort comparing GEOI and ARD. At that time GEOI was trading higher than ARD (GEOI ~$14-$15 and ARD ~$13-14.) On July 29, 2005 I sold all my GEOI shares in favor of ARD shares. Fundamentally ARD was (and still is) a far superior company to GEOI. However the market felt otherwise. Today GEOI is $7 and ARD is $29. I feel the market is prone to "GROUPTHINK." Groupthink is simply going with the flow and agreeing with the group even if the group is wrong. Over time the valuation imbalances that exist between two companies will be corrected. We have witnessed a valuation correction between GEOI and ARD. I fully expect that we will witness the same valuation correction between GMXR and ARD. Currently, we are in the midst of this valuation correction between GMXR and ARD as investors take note of each company’s fundamentals and future prospects.
In conclusion, My purpose is simply to raise the redflag on GMXR and sound the alarm bells so that those who are openminded (those that don't subscribe to GROUPTHINK) can exit GMXR without further damage to the value of their portfolio. Please don't view my posts as an attack on GMXR shareprice. My intent is only to inform, educate and to prove that the market is NOT efficient in valuing companies. My blog has been established in order to archive my remarks so that we can go back in time to see if I was right or wrong and to ultimately MEASURE MY PERFORMANCE.
God Bless,
Dok
Author, Research Analyst
The ARD Blog
www.doktorstocks.blogspot.com
Research Intended to Help Investors
Please don't take any of my previous posts regarding GMXR personally. I realize that when someone questions a company's fundamentals, valuation, business plan, management team, etc there are bound to be those who take it personally. Nobody likes to hear negative words about one’s investment. Let's face it, most have invested in GMXR because they think it is going higher. So someone like me who posts negative remarks about GMXR is viewed as a basher or someone with ulterior motives (short the stock.)
I can assure everyone that I am not short the stock. I have no ulterior motives.
My ONLY motive is to point out the fact that by comparing GMXR with other companies (benchmarking) I have determined that
GMXR is overvalued in relation to other companies (most notable ARD.) I first wrote about this overvaluation/imbalance on December 17, 2005, when I commented, "I have no doubt that ARD valuation in terms of share price will exceed that of GMXR in the near future as investors recognize the superior values and fundamentals." At that time, GMXR was priced at $36.69 and ARD was priced at $28.75. In other words, GMXR shares were valued at a 27.6% premium to ARD shares.
Today ARD shares trade at $29.71 and GMXR shares trade at
$28.48. Not only has GMXR lost 22.3% of its value while ARD has risen 3.3% since December 17, 2005 but ARD also has exceeded the share price of GMXR as I projected.
GMXR will trend lower (longterm) barring multiple hurricanes in the Gulf of Mexico. Note that the macro picture of NG is not good. At the same time we can expect ARD to trend higher: I have a $60 price target.
GMXR is not the first company I have been critical of regarding valuation. In July of 2005, I spent considerable time and effort comparing GEOI and ARD. At that time GEOI was trading higher than ARD (GEOI ~$14-$15 and ARD ~$13-14.) On July 29, 2005 I sold all my GEOI shares in favor of ARD shares. Fundamentally ARD was (and still is) a far superior company to GEOI. However the market felt otherwise. Today GEOI is $7 and ARD is $29. I feel the market is prone to "GROUPTHINK." Groupthink is simply going with the flow and agreeing with the group even if the group is wrong. Over time the valuation imbalances that exist between two companies will be corrected. We have witnessed a valuation correction between GEOI and ARD. I fully expect that we will witness the same valuation correction between GMXR and ARD. Currently, we are in the midst of this valuation correction between GMXR and ARD as investors take note of each company’s fundamentals and future prospects.
In conclusion, My purpose is simply to raise the redflag on GMXR and sound the alarm bells so that those who are openminded (those that don't subscribe to GROUPTHINK) can exit GMXR without further damage to the value of their portfolio. Please don't view my posts as an attack on GMXR shareprice. My intent is only to inform, educate and to prove that the market is NOT efficient in valuing companies. My blog has been established in order to archive my remarks so that we can go back in time to see if I was right or wrong and to ultimately MEASURE MY PERFORMANCE.
God Bless,
Dok
Author, Research Analyst
The ARD Blog
www.doktorstocks.blogspot.com
posted by -Aztec- at 10:39 AM
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