It’s been a wild and exhilarating ride for Creative Technology Limited the past few weeks. I’ll let the chart speak for itself.
Impressive ain’t it? 6 bagger in less than a month. Peter Lynch would be proud.
I last looked at Creative around Q4 last year when it was trading in the range of S$1-S$1.20. I got interested when I saw that it was actually trading below cash…a virtual unicorn…the net net stock.
You’d think I would be kicking myself for not investing, but I’m not really that fussed because after setting aside the profit and cash from Creative’s legal win around the time of my analysis, it was losing cash like nobody’s business. So even though I was attracted by the balance sheet, it seemed rather likely that the cash burn would continue. I remember that most of the announcements were related to legal suits defending Creative’s patents and I didn’t have sufficient knowledge to value those or determine the merits of the claims.
I did consider a punt of a few Ks but decided against it in the end. With 20-20 hindsight, that’s a major miss of 600% earnings…but realistically I would also have completely sold out when the price reached S$2-S$3, let alone ride it to S$9+. Sigh, the drawbacks of being a value investor. Always early to the party and quick to leave. Haha 😀
The learning point is that Ben Graham’s following words of wisdom rings true and brings comfort in down times (like missing out on gains in this case) and humility in success:
“You are neither right nor wrong because the crowd disagrees with you. You are right because your data and reasoning are right. “
At the time of my analysis, this new technology hadn’t yet been announced so I was working with what I had. *shrug*
A key question now could be whether to buy into Creative and follow it up to S$100??!! Haha. I don’t know where the stock is headed…and I can’t reliably come up with an estimate of it’s probable value as so much hinges on whether it can roll out that new tech successfully…so I’m sitting this one out for now. Personally my hunch is that the price will continue the past few days’ downtrend, but I’m not one to invest on hunches. 😀
What about you? Did you manage to catch the wave and ride it up for a few ‘00% gains? 🙂
Disclaimer: I have no positions in any stocks mentioned, and may and may not initiate any positions without notice. The above references an opinion, is for information purposes only and has not taken into account your personal financial position or objectives. It is not intended to be investment advice. Seek a duly licensed professional for investment advice.
Author: Mr.C
Mr.C – our resident investment expert and the muscle behind this entire movement for Sipping Coconuts. When his nose is not buried in anything financial, he’s either sailing or cooking or with the kids and always with a beer or a coconut nearby!