This is my first post on this forum, and it took some courage to write it. I haven’t followed the forum much, and I’m not a veteran investor either. I also can’t say if there’s a clear theme in this post that would be useful to anyone else or if I can adequately explain my thoughts.
I work for a Finnish publicly traded company, whose ownership, according to my latest information, is quite firmly in Finnish hands. Although I’m not strictly subject to insider trading legislation, I work in a position where I sometimes have better information than the market on certain matters, which is why I have to write this anonymously and not reveal more about the company. Therefore, I often cannot trade my employer’s shares, and currently my position is a round 0 shares. I believe the current valuation is significantly above what I expect from my investments. I might be wrong about this, as that has happened thousands of times.
It’s very interesting to follow the forum discussions about this company, and I absolutely tip my hat to the analyses that have been done on the firm based on interim reports and public announcements. At times, they have revealed things that have brought new insights even to me. I assume, believe, and hope that their authors have written them honestly based on public information, and that it hasn’t been an insider trying to, for example, inflate the share price.
In addition to quality analyses appearing on the forum, sometimes there are also speculations that are completely off the mark. The estimates are completely exaggerated and unrealistic. Sometimes it’s easy to see how adding certain things together could lead to such a conclusion, even if the result is wrong. However, the real point is that this forum, in my opinion, has a huge impact on the firm’s stock price. If the stock has risen or fallen “without reason,” as is often the case, you can usually read here who has speculated what and how many people have then followed suit – regardless of whether the speculations made sense from my perspective.
On the other hand, I couldn’t help but think how easy it would be to manipulate the company’s stock, for example, in a “hype and dump” fashion. I’m not accusing anyone without proof, but if I were an owner-CEO, I’d say it would be very easy to do without committing an actual crime, or at least without getting caught. If I take an example, the stock market heavily (over)values future expectations, and if there’s even a small hint of exponential growth, it’s rewarded with a significant increase in value. If I wanted to create such a situation, it would be quite cheap to hire a part-time student in Stockholm, London, and Paris to twiddle their thumbs, and then announce that the company has established offices in these locations with the goal of gaining market share there in the coming years. After that, all it takes is an otherwise true news item that the first delivery has been made abroad (no matter how insignificant financially or otherwise), and someone will already be calculating that the conquest of Europe is about to begin, and the stock price jumps by twenty percent.
The unfortunate thing is that I can’t directly advise how to avoid that. Personally, I want to see evidence from the company in terms of dividends and I don’t want to rely solely on the sweet statements of CEOs interviewed by Inderes analysts. It feels like unprofitable business can be explained away so easily with growth. If a company makes one or two acquisitions a year, there’s always some justification why the results aren’t comparable (there will be one-off items and other things). It would be great if one could say that it’s worth looking at CEOs’ past endeavors when assessing their credibility and honesty, but it’s not that easy or always possible.
What kind of thoughts does this writing evoke?
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