Glen Mead

Titan Machinery: Doesn't Anybody Look at Valuation?

HANS was a spectacular winner for more than a year. Shooting stars come down sometimes faster than they go up. There have been plenty of them. GROW comes to mind.

The idea of buying a stock and holding it to your grave seems to me to be counter productive. I mean, what's the point? When you have made a good profit on a stock and it looks like the main part of the move is over, why not step aside and look for better opportunities?

The few articles I read on Warren Buffet have pointed out that he buys and sells frequently. Sure, he has held on to some well known names, but he has bought and sold more than he bought and held. My point was that an IPO can have tremendous upward momentum in the first year in particular after they go public. Using a Graham/Dodd valuation method on IPOs is rediculous. There is too much volatility as investors and traders jockey for position in the new company.

Sorry if my tone was offensive. Taking a short position in a stock and then publishing a scathing criticism of it in a blog that will be picked up on the Yahoo! Finance web page for that stock seems a little self serving. Of course that is just my opinion.
Since there is no other news that I can discover on TITN that could have moved the share price I am presuming this is what did it.

Best Regards,

Glen

Titan Machinery: Doesn't Anybody Look at Valuation?

I think you have applied a Graham/Buffet style value study to an IPO is an hot sector. This sort of valuation method seems to me to be better suited to Dow index components, or at least companies that have been public for at least 10 years. This is a momentum stock. Your Benjamin Graham approach to valuation will be valid in a few years, but not now. Not with the furor over grain prices in both here and abroad.

Norman Vincent Peale made a good point in his book "The Power of Positive Thinking". He said, "attitudes are more important than facts". You method of calculating value for TITN, if applied to GOOG when it first IPOed would have kept everyone out of that stock as well. I seem to recall people doing very well with that one in the first year or two. Others stocks come to mind. HANS, TASR, ERS. Legitimate momentum stocks that would not have stood up to the valuation methods you employed that are better suited to mature, non-growth, dividend type stocks.

I was surprised at your open admission of your short position. I suspected as much, but for you to just blurt it out like that was nothing less than astonishing. With no other news to move the stock except your blog I suspect you are responsible for the tumble in price today. Nice going. I hope the SEC takes a close look at your actions.

I took advantage of the situation to add to my position. I don't question the numbers in your evalutation, but I think you completely missed the point of what kind of critter TITN is. You seem to be applying pig judging rules in a dog show. Did you deliberately try to trip up the share price? Not content to wait for your wisdom to prevail? Let me guess, you've already covered your short position.