SeenIt Before

Strong Growth in Lithium Demand to Power FMC Corp., Rockwood Holdings

Why are the Insiders including the CEO and the CFO selling most of their stock? There is ALOT of selling going on. Is there a bad earnings report coming up? A CFO in the process of liquidating his postion is NOT a good sign.

Titan Machinery: Doesn't Anybody Look at Valuation?

This was an extremely well written and comprehensive analysis of Titan Machinery (NASDAQ: TITN). After checking up on the facts presented it’s clear that the author has done his homework well. Luckily I was able to get a pretty decent short position today on the bounce… dead cat?.. we’ll see.

There are several things that make this look like a situation that was designed to make a few people (insiders) very wealthy (or wealthier) and leave the people investing long “holding the bag” in the end.

The insiders started selling at $20 a share. As was mentioned they have large positions and cannot get out of them easily but will likely keep selling to insure profiting from this “multiple arbitrage” play.

This was an IPO valued at $8.50 seven months ago. What makes it worth 3 times that much now 7 months later? Were all of the prior owners of these farm equipment dealerships stupid and therefore sold their businesses really cheap? Usually people in this type of business worked long and hard and know what their business is worth. 30 of Titan’s 40 stores were purchased relatively recently so it difficult to imagine that somehow they’re worth a lot more now.

There are a number of ways for the insiders to make money besides ongoing stock sales. 25 of the 40 stores are paying rent each month to the insiders. I wonder how often the rents have gone up lately? Then there is also the salaries and additional compensation to the principals and Board members. There is no doubt that there are also other ways that are not mentioned here.

A few years back some people I know invested in a hot IPO they thought had more "momentum" left in it. It was DriveTime, the used car dealership with stores in 9 states. A very small group of owners took it public and over a couple of years liquidated their positions. Then the company released a series of disappointing financial reports and the stock tanked. Big time. Then the insiders bought back all of the stock with money they had taken out of the market and still had PLENTY left over. Today DriveTime is privately held by the original principals and is doing relatively well. Their plan worked out perfectly.

I want to be clear on a few points. I am not saying the stock has no value and I am not saying that the insiders are lacking in integrity. I do not know them so I am not qualified to comment on their motives. What I am saying is that given what is known, and also taking into account what is unknown, the stock is seriously overpriced and the enormous exposure will likely lead to people investing "long" losing money when hype is over. It’s not if, it’s WHEN the hype is over. This is, after all, farm equipment. Possibly, 2nd tier farm equipment at that.