FARO in the doghouse
I've been an owner of FARO since January, with an average purchase price of about $27. Needless to say it hasn't been terribly pleasant watching this once highflying stock fall into disrepair this past Spring and Summer. I was a lot more optimistic ab
out them in July, as I wrote about maybe trying to catch a falling knife, but things didn't turn around as I thought they might and I'm a little more concerned today.
This was a stock that came to my attention courtesy of Hidden Gems over at the Fool, though I no longer subscribe to that newsletter and am not privy to their current thoughts on it. Another Fool writer just wrote an interesting piece about selling FARO today, which brought it back out from the back of my brain where it had been stewing. I'm not necessarily giving up on Simon Raab and his cohort, but there's definitely concern in the air.
From outside, this looks like a situation where the founding science guys of a technology company had trouble with the business and competition side of things -- and especially with the job of managing market expectations. I don't know if that's a fair assessment, it's just my impression. Everything I've read tells me that the FARO arm is a significant tool with a great market and with a market leadership position in both sales and technology. And hey, Boeing just ordered a bunch more of them and they have a very deep and wide installed base of users and broad potential applications. That's the good news.
But everything I read lately tells me that this management is worrisome. Read the Fool piece above for a better take on this, but the basic gist is that Raab planned to ease out of his ownership position through a scheduled selling plan -- which is fine. But before it started to appear to outside investors that the wheels were coming off the bus, he accelerated that plan significantly and was able to sell at much better prices than we're seeing today.
I'm willing to give him some benefit of the doubt. I don't mind when founders and major insiders sell some of their holdings -- that's why you go public, after all, to make your fortune from the company you built. But given the fact that FARO was until their last earnings announcement still holding to an unrealistic earnings forecast for this year, It stinks of management propping up the stock price just long enough to get their own shares sold.
I certainly don't know that that's what they were doing -- but it definitely looks bad.
Just as I buy in chunks -- usually taking two or three purchases to build up a full position in a company -- so I often prefer to sell in chunks, too, and I'm going to look into FARO in much more detail to see whether it makes sense to sell a portion of my FARO holdings before the end of the year to offset some of my taxable gains. I'll let you know what I decide -- and if you're a FARO owner, too, let me know what you think.
This was a stock that came to my attention courtesy of Hidden Gems over at the Fool, though I no longer subscribe to that newsletter and am not privy to their current thoughts on it. Another Fool writer just wrote an interesting piece about selling FARO today, which brought it back out from the back of my brain where it had been stewing. I'm not necessarily giving up on Simon Raab and his cohort, but there's definitely concern in the air.
From outside, this looks like a situation where the founding science guys of a technology company had trouble with the business and competition side of things -- and especially with the job of managing market expectations. I don't know if that's a fair assessment, it's just my impression. Everything I've read tells me that the FARO arm is a significant tool with a great market and with a market leadership position in both sales and technology. And hey, Boeing just ordered a bunch more of them and they have a very deep and wide installed base of users and broad potential applications. That's the good news.
But everything I read lately tells me that this management is worrisome. Read the Fool piece above for a better take on this, but the basic gist is that Raab planned to ease out of his ownership position through a scheduled selling plan -- which is fine. But before it started to appear to outside investors that the wheels were coming off the bus, he accelerated that plan significantly and was able to sell at much better prices than we're seeing today.
I'm willing to give him some benefit of the doubt. I don't mind when founders and major insiders sell some of their holdings -- that's why you go public, after all, to make your fortune from the company you built. But given the fact that FARO was until their last earnings announcement still holding to an unrealistic earnings forecast for this year, It stinks of management propping up the stock price just long enough to get their own shares sold.
I certainly don't know that that's what they were doing -- but it definitely looks bad.
Just as I buy in chunks -- usually taking two or three purchases to build up a full position in a company -- so I often prefer to sell in chunks, too, and I'm going to look into FARO in much more detail to see whether it makes sense to sell a portion of my FARO holdings before the end of the year to offset some of my taxable gains. I'll let you know what I decide -- and if you're a FARO owner, too, let me know what you think.
Labels: FARO
This article posted by One Guy @ 12/01/2005 03:35:00 PM 0 comments
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