Buy High, Sell Low (FARO)
Well, sometimes three weeks makes a big difference. I spent a fair amount of time reconsidering FARO Technologies (FARO -- click to register for free RT streaming quote) back in December, and then early in January I decided that I would hold on and hope that my assessment of management and of their ongoing business prospects was correct.
Those of you who watch the company or can see the little chart on the right will note that it fell dramatically on Friday on a shocking revision to their earnings guidance, and if you've watched the company for more than a month or so you'll note that this isn't a first. It's been a bad year to be a FARO owner.
Their ongoing business prospects may still be fine, and, frankly, I think their market is still pretty good ... but I have now really lost faith in management, and whenever that happens a little red "sell" flag flies across my mind.
So today I sold FARO at a significant loss -- I had bought early last year at an average price of about $27, and sold today at $14.98.
Ouch.
There are few things that are constant about me as an investor, I've found. One of them is that I have tried with some success to be extremely patient about selling, whether it's to lock in gains or get rid of losing positions -- and for the most part, that works out. But it definitely didn't work this time -- in retrospect, my initial fears for Faro were correct, and my more rational calculation at a later date was wrong. Of course, there was no way to know that at the time.
My experience with Design Within Reach (DWRI-- click to register for free RT streaming quote) another flop of an investment that I sold recently, was pretty similar -- in both cases, management seemed to lose control of the company and failed completely to communicate effectively with investors. DWRI is a much worse company than FARO in other ways, in my opinion, but the problems with management followed a similar track over the course of the past six months or so. Maybe both of those companies will recover and be great investments over the next few years, but it seems a bad bet to me.
I think holding on to companies that you believe have a bright future is still the right way to go, even if their value has gotten ahead of them or they've had some bad news impact their stock price. But even if that's the right way for me to invest most of the time, it sure backfired here.
So fare thee well, FARO. I had high hopes, but it no longer seems like management has enough control over the company's growth, expenses or operations -- being this far off on your estimates isn't acceptable, especially when it happens a few times in a row and management is engaged in selling a significant portion of their shares. There are too many fish in the sea to hold on to this one.
Those of you who watch the company or can see the little chart on the right will note that it fell dramatically on Friday on a shocking revision to their earnings guidance, and if you've watched the company for more than a month or so you'll note that this isn't a first. It's been a bad year to be a FARO owner.
Their ongoing business prospects may still be fine, and, frankly, I think their market is still pretty good ... but I have now really lost faith in management, and whenever that happens a little red "sell" flag flies across my mind.
So today I sold FARO at a significant loss -- I had bought early last year at an average price of about $27, and sold today at $14.98.
Ouch.
There are few things that are constant about me as an investor, I've found. One of them is that I have tried with some success to be extremely patient about selling, whether it's to lock in gains or get rid of losing positions -- and for the most part, that works out. But it definitely didn't work this time -- in retrospect, my initial fears for Faro were correct, and my more rational calculation at a later date was wrong. Of course, there was no way to know that at the time.
My experience with Design Within Reach (DWRI-- click to register for free RT streaming quote) another flop of an investment that I sold recently, was pretty similar -- in both cases, management seemed to lose control of the company and failed completely to communicate effectively with investors. DWRI is a much worse company than FARO in other ways, in my opinion, but the problems with management followed a similar track over the course of the past six months or so. Maybe both of those companies will recover and be great investments over the next few years, but it seems a bad bet to me.
I think holding on to companies that you believe have a bright future is still the right way to go, even if their value has gotten ahead of them or they've had some bad news impact their stock price. But even if that's the right way for me to invest most of the time, it sure backfired here.
So fare thee well, FARO. I had high hopes, but it no longer seems like management has enough control over the company's growth, expenses or operations -- being this far off on your estimates isn't acceptable, especially when it happens a few times in a row and management is engaged in selling a significant portion of their shares. There are too many fish in the sea to hold on to this one.
This article posted by One Guy @ 1/23/2006 01:40:00 PM 0 comments
Add to: del.icio.us *Furl *Google *Spurl *reddit *StumbleUpon *Yahoo MyWeb *
Add to: del.icio.us *Furl *Google *Spurl *reddit *StumbleUpon *Yahoo MyWeb *
