05/22/2012: GARY ON NATIONALLY SYNDICATED INVESTORS EDGE RADIO BROADCAST
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https://archives.warpradio.com/btr/InvestorsEdge/052218.mp3
JUST LETTING YOU KNOW
If I Had to Give an Answer…I’d Say $15 Bucks
I want to discuss Facebook again today.
Facebook (FB) finished down another $3 dollars to 31.
As I’m doing my radio show today, it’s down in the aftermarket as…
…the State of Massachusetts regulators are investigating Morgan Stanley and the Facebook deal.
….a class action lawsuit unfolds against the Nasdaq for mishandling the IPO, or at least they’re looking for class action status.
…And there will be more.
Expect every state regulator to get involved and look into whatever’s going on.
Ladies and gentleman, I don’t anybody committed any criminal acts. I think greed was the culprit here. I don’t know if you can indict greed, but greed was the culprit.
The investment bankers decided to put their fees in front of the investing public and in turn…oh they’ll be getting their fees. You know how they’ll be getting their fees? Oh…I’m sorry, the attorneys will be getting their fees.
I think everything in this story encapsulates and encompasses everything that I have tried to teach you…about you and your money…during my tenure on my radio show.
- Do your homework.
- Because when noise is loudest, the risk is highest.
I have to tell you, leading up this IPO, I watched what was happening on television. It was nauseating to watch. You would have thought that this deal was opening at 60…70…80…or…90. You would have though this is the “2nd Coming” and all it is — is a website where people get together and say “hi” and all that stuff. And yes, they have $3 and change billion in revenue and they make a billion dollars.
But there’s a price for that…and it’s not $100 billion. Who came up with that $100 billion number? Morgan Stanley. And the other bankers? They’re at fault in a big way. But this is not the first time. They were doing it through the late 1990s like crazy. They would bring companies public that had no sales with billion dollar market caps and you people bought them. And they open up at $2 billion market caps and they went to $3 and $4 and $5 billion market caps before they went to zero.
Price and valuation matters.
Not to Morgan Stanley, though. They jumped over dollars to get dimes and that’s what they’re going to end up with.
I had no idea what the stock would open up at. Because that’s a random number. I knew what they were bringing it at. But I knew when they could only open it up in the low 40s that there was trouble.
And they bit of more than they could chew by a large margin.
And who’s paying?
You guys.
I can’t absolve those of you who bought.
You didn’t do your homework. Because with the loud noise, you had to be in. Couldn’t miss it. This was it.
Well it WAS it.
It was a gimme, because as I told you on my show, the valuation was outrageous. Over the top. Insane. Stupid. Silly. Moronic. And it showed the greed of some on Wall Street.
But I don’t care about them.
I care about you.
You have to learn these lessons.
They won’t. You can.
You’re hard earned capital is very important. Don’t make it easy for them to take it away.
My expectations? Lower. Lawsuits. A lot of problems going forward.
The politicians are going to get involved and that’s not good news.
I was asked many times today, what I do I think a good valuation is? I don’t know. But if somebody put my back to the wall and I had to give one answer, I’d say $15 bucks. I’m not saying it’s going there. But that would be my guess. And maybe even through, it’s got a high valuation.
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Gary Kaltbaum owns Kaltbaum Capital Management, LLC (“KCM”), an investment adviser registered with the U.S. Securities and Exchange Commission. The opinions expressed herein are those of Mr. Kaltbaum and may not reflect those of KCM. The information offered in this publication is general information that does not take into account the individual circumstances, financial situation or individual needs of an investor. The information herein has been obtained from sources believed to be reliable, but we cannot assure its accuracy or completeness. Neither the information nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. Any reference to past performance is not to be implied or construed as a guarantee of future results.