ThinkEquity: Fallen Bidz.com Is a Grahamian Opportunity

ThinkEquity is out defending Bidz.com (NASDAQ:BIDZ) this morning noting that although last Monday's attack on the company from Citron Research was, "ill-informed... exaggerated... poor financial analysis... and ... mere innuendo," the stock price was cut in half.

Some investors simply flee when stocks suddenly become complicated or controversial, and buying pressure is reduced. Thus, even though Citron's promised Wednesday follow-up, advertised as an exposé of "questionable bids and bidding practices," proved to be a fizzling bit of a tempest manqué in a teapot, the stock did not recover. It sometimes takes a while for the market to recover its usual aplomb in "anticipating profitability reasonably well and valuing it appropriately."

According to ThinkEquity, the attack on the company and its credibility has set up a classic Mister Market Moment... a moment of real investment opportunity. In 'The Intelligent Investor', Ben Graham proposes that you have an emotionally-volatile partner in a business, Mister Market, who offers to buy your half or sell you his at wild prices, some very high, some very low, and asks rhetorically whether Mister Market's labile lunacy should change your sense of the value of the business.

The answer to that question, ThinkEquity thinks, of course, is "No." The question that was not asked, "Should you sometimes accept Mister Market's offer?" has an obvious answer too... and they think the answer is "Yes."

The firm still thinks that BIDZ.com shares should trade in the $20 range in the next 12 months and maintain their Buy rating.

Notablecalls: If for nothing more, at least it's entertaining. Citron's piece of BIDZ didn't include anything shocking, so I would not be surprised to see ThinkEquity to be proven right here.

Can't say I'm a big fan of BIDZ's business model but they are profitable and showing strong growth.

Comments

[Johnny B.:]

Gee I don't know, I'm still torn. Who should I believe, a respected Wall St. firm, who along with Roth capital, think that BIDZ is a buy; or a slime ball with a crooked past, that profited from a bogus smear article. Thank you ThinkEquity , Roth Capital, and Seeking Alpha for geting the truth out there!

2007 Dec 04 10:50 AM

[Investor Savy:]

Notable Calls - quick question. What don't you like about this business model?

2007 Dec 04 10:53 AM

[Dan Jacome:]

I'll go with Citron -- they have a good track record. BIDZ violated one ony my "top 5 reasons to sell a stock" list.

Rule #4: Mgmt is not transparent

2007 Dec 04 01:12 PM

[Russ N.:]

I invested in Bidz in a venture position 6 years ago. 2000 shares of a speculative company @ $5.00. They convinced me then and have fascinated me since. Their growth has been awe inspiring. After the Lemon Guy caused the pullback in price. I tripled my position.
I was there when they quadrupled their warehousing and were posting 200% gains with very little advertising. All word of mouth.
Remember.... Some people bought Ebay at $2.00 many splits ago before Ebay became a household name. Bidz is a no brainer buy. Watch their numbers.

2007 Dec 04 06:24 PM

[Hustler69:]

Did you see the latest press release. Reaffirming 2008 guidance and moving to the high end of this Qtr results. Stock has leveled off the big swings. Get it now cause its going to the high teens by end of 2007. Bank on it baby.

2007 Dec 05 04:41 PM

[TERN:]

Rather than focusing on the chart, I read the Citron piece and followed the links. For those who read the Aframian conviction pdf, I picked up this comment in a complaint forum, by a company spokesperson (Mouniyah Aframian):Posted: Mar 08 '07, 10:20 am Reply
Reviews written: 0
Member since: Apr 13 '06

Post: 114587
RE: Bidz.com - Sells Junk via auction

First I would like to start off by asking this customer if the customer would like to return the Fuel watch. I have talked with the returns department manger and he said that he would ok your return if it was past the 15 day return policy. We would suggest the customer to go to a jeweler and have them type up a statement explaining what that customer claims is wrong with the watch. All I would need to proceed with the return is the customer’s user name or the listing number of the watch. If this customer has any questions or concerns feel free to contact me at 800-444-81-24 or 310-280-7373 select option one and ask to speak with me my name is MOUNYAH or if you would like you can email me at [e-mail]. I will be waiting to hear from this customer.

My conclusion: RUN from what is left of this stock and don't insult the memory of Graham.

2007 Dec 05 11:11 PM

[Eba Ebi:]

Y'all got ur azzez reamed, dint ya.

2008 Jan 19 08:52 PM