So the market's getting killed again today, and yet there's REFR just puttering along, not going anywhere, actually up a few pennies.
Time was when the promoters would try to make a big deal of that. By now, however, even they have abandoned that tack, as it is simply too easy to point out that REFR's non-decline is simply a result of its from the greater market.
Institutions want to sell five million shares of IBM, and they want to do it yesterday. Same with Apple a day earlier, and they actually had good earnings.
No one's selling REFR, because no one owns REFR. The only people in it, as I've stated before, are the ignorant, the naive, and the indoctrinated. And those four anonymous hedge funds, all of whom have a vested interest in not crashing the price.
So REFR goes nowhere, and will continue to go nowhere until the hedge funds finally give up, or somehow manage to dispose of their holdings, or a year passes and a new set of funds get cut a deal on the next million shares that screws over the original four.
Still, on days like this, that almost sounds good.
Friday, April 15, 2005
Thursday, April 14, 2005
The moving billboard
The rather flashy vehicle above is the sum total contribution of REFR's UK licensee, Vision-Environmental Ltd. to the SPD promotional cause.
Vision-Environmental is another one-man shop, though at least this one has some notable credentials in the architecture field. The proprietor's name is Bob Hudson, and he has a solid brace of projects such as malls and office buildings to his credit.
For SPD, Hudson took a Lotus Elise, gave it a spray-paint job to make it into the world's first (and, to date, last) "moving billboard" for SPD. And if you had happened to be in the right place at the right time in late 2003, you just might have caught a glimpse of this vehicle being driven from Hudson's home office in Waterlooville to the inaugural 100% Detail Exhibition in London.
How the "head-turned" viewer was supposed to know that SPD referred to the tinting of the windows, and in particular the fact that the tinting could change, one can only speculate.
At any rate, the car made it to London without incident and was shown off as promised, and, despite the "hundreds of serious inquiries" received, that was the last time anyone saw the car, heard of Vision-Environmental, or connected Mr. Hudson with REFR and SPD.
But Mr. Hudson did write a nice letter back reporting on the exhibition, so I guess it wasn't a total loss.
Wednesday, April 13, 2005
Ir-ratio-nality
Promoters and shareholders in REFR may vilify Motley Fool for their dogged sticking to the facts in their reporting on the company, but that doesn't mean they won't take cues from them when they think it to their advantage.
Back in the day, when the Fool ran model portfolios and dared to dip its toe in the waters of short selling and brave the backlash from the shareholders of the stock in question, they set guidelines for isolating short-sell candidates, as they do for all investment strategies.
One of the items in the Fool checklist for determining short candidates was called the short-interest ratio. The short-interest ratio is calculated by dividing the total short interest, a figure reported monthly by the exchanges, by the average daily volume. A high short interest ratio, anything above 10 or so, indicates a "crowded" short, which may be prone to a short squeeze, wherein too many short sellers attempt to cover on a downturn in the stock, thus turning it into an upturn. In some cases this can feed upon itself and turn into a huge gain for longs and a disaster for shorts. Short squeezes were everywhere one looked in the late 1990's, but have become quite rare since the peak of the bubble.
Now, I don't claim the Fool invented the metric or anything, but they certainly went a long way to popularizing it. Many investors, however, chose to use the metric the other way, deliberately looking for high-ratio stock as candidates for short squeezes. Again, this strategy worked fine from 1998 through early 2000 (then again, what long strategy didn't?), but after that, not so much.
Now, it's one thing for investors to get into the short interest ratio calculations. However, when a company explicitly start taking an interest in such a figure, warning sirens should be going off at maximum decibels. But what company would do something like that?
Guess.
Yes, the focus of that press release might have been Asensio, but there it is in all its glory, REFR commenting on its own short interest ratio. Cooler heads presumably prevailed soon after, as the logical followup press release, "Research Frontiers Issues Strong Buy Recommendation on Itself", never appeared.
A funny thing about ratios, though. Because they're a function of two other figures, there are two ways to change them. In the case of the short interest ratio, it can go up under two circumstances: a) short interest goes higher, or b) average daily volume goes lower.
I emphasized (b) above because the current short interest ratio in REFR, still a fairly lofty 27 at last report, has been skewed by a marked decrease in average daily volume in REFR over the past couple of years. (I should note that this was not the case in the press release referenced above.) In fact, short interest has declined by more than half from its peak. (There may be reasons for that which do not relate directly to normal short selling, but that is a topic for another post.)
Nevertheless, the drumbeat that REFR is ripe for some kind of short squeeze never seems to cease. 27 days to cover! Never mind that the ratio peaked near 100 at one point. One might practically expect the shorts to spontaneously combust at that level, yet that did not happen. Furthermore, the whole "days to cover" business assumes, freakishly, that if some event were to occur to prompt short-covering, that the average volume in REFR would nevertheless remain at its current level, under 25,000 shares per day. A short squeeze in slow-motion, if you will. Quite an amusing concept.
Finally, of course, they ignore the four elephants in the room, the hedge funds that bought 1,000,000 shares of REFR at a fleeting discount, who would be more than happy, at this point, to grab profits by selling to the covering shorts, and exercising and cashing out the $7.50 warrants in the event the stock got that high.
Mr. Whipple need not fret. There will be no squeezing going on here anytime soon.
Back in the day, when the Fool ran model portfolios and dared to dip its toe in the waters of short selling and brave the backlash from the shareholders of the stock in question, they set guidelines for isolating short-sell candidates, as they do for all investment strategies.
One of the items in the Fool checklist for determining short candidates was called the short-interest ratio. The short-interest ratio is calculated by dividing the total short interest, a figure reported monthly by the exchanges, by the average daily volume. A high short interest ratio, anything above 10 or so, indicates a "crowded" short, which may be prone to a short squeeze, wherein too many short sellers attempt to cover on a downturn in the stock, thus turning it into an upturn. In some cases this can feed upon itself and turn into a huge gain for longs and a disaster for shorts. Short squeezes were everywhere one looked in the late 1990's, but have become quite rare since the peak of the bubble.
Now, I don't claim the Fool invented the metric or anything, but they certainly went a long way to popularizing it. Many investors, however, chose to use the metric the other way, deliberately looking for high-ratio stock as candidates for short squeezes. Again, this strategy worked fine from 1998 through early 2000 (then again, what long strategy didn't?), but after that, not so much.
Now, it's one thing for investors to get into the short interest ratio calculations. However, when a company explicitly start taking an interest in such a figure, warning sirens should be going off at maximum decibels. But what company would do something like that?
Guess.
Yes, the focus of that press release might have been Asensio, but there it is in all its glory, REFR commenting on its own short interest ratio. Cooler heads presumably prevailed soon after, as the logical followup press release, "Research Frontiers Issues Strong Buy Recommendation on Itself", never appeared.
A funny thing about ratios, though. Because they're a function of two other figures, there are two ways to change them. In the case of the short interest ratio, it can go up under two circumstances: a) short interest goes higher, or b) average daily volume goes lower.
I emphasized (b) above because the current short interest ratio in REFR, still a fairly lofty 27 at last report, has been skewed by a marked decrease in average daily volume in REFR over the past couple of years. (I should note that this was not the case in the press release referenced above.) In fact, short interest has declined by more than half from its peak. (There may be reasons for that which do not relate directly to normal short selling, but that is a topic for another post.)
Nevertheless, the drumbeat that REFR is ripe for some kind of short squeeze never seems to cease. 27 days to cover! Never mind that the ratio peaked near 100 at one point. One might practically expect the shorts to spontaneously combust at that level, yet that did not happen. Furthermore, the whole "days to cover" business assumes, freakishly, that if some event were to occur to prompt short-covering, that the average volume in REFR would nevertheless remain at its current level, under 25,000 shares per day. A short squeeze in slow-motion, if you will. Quite an amusing concept.
Finally, of course, they ignore the four elephants in the room, the hedge funds that bought 1,000,000 shares of REFR at a fleeting discount, who would be more than happy, at this point, to grab profits by selling to the covering shorts, and exercising and cashing out the $7.50 warrants in the event the stock got that high.
Mr. Whipple need not fret. There will be no squeezing going on here anytime soon.
Tuesday, April 12, 2005
In descent
Not a whole lot of time for company-related stuff today, so I just thought I'd note the chart pattern of the last six weeks is forming what the chartists call a descending triangle, with successively lower highs coming off a flat bottom. The first run hit $6.50, the second petered out at $5.75, and the little spike to $5.40 today might just be all there is to the current rally. Of course, every little spike is greeted with the predictable "*gasp* someone must know something!" by some dimwit on the boards, but what can you do.
One other item: Just to prove that even the dryest of haystacks have their needles of useful information, the person who posts as numerous variations of "Bink" on the boards let on that Saint-Gobain Glass, a major proponent of electrochromic glass whose licensing was taken by the promoters as a repudiation of that technology in favor of EC, had instead dumped SPD. This was the same alias that called SPD Inc.'s closure a month in advance (as with Saint-Gobain, couching it in terms of "too bad for them") so it looks very much like another setback for Woodbury.
One other item: Just to prove that even the dryest of haystacks have their needles of useful information, the person who posts as numerous variations of "Bink" on the boards let on that Saint-Gobain Glass, a major proponent of electrochromic glass whose licensing was taken by the promoters as a repudiation of that technology in favor of EC, had instead dumped SPD. This was the same alias that called SPD Inc.'s closure a month in advance (as with Saint-Gobain, couching it in terms of "too bad for them") so it looks very much like another setback for Woodbury.
Monday, April 11, 2005
SPD the energy-saving wonder
Another tack used by REFR promoters, particularly of late with crude oil hovering over $50 a barrel, is to tout the incredible energy-saving properties of SPD film.
That's incredible, of course, in the sense of "not credible".
There is doubtless a certain amount of heat blockage inherent in the light-blocking capability of SPD. And the thickness of the glass is marginally increased by the inclusion of an SPD film layer, thus adding a nominal insulation value.
But the claims made (not independently tested, of course) by REFR and its promoters for energy savings using SPD film go far beyond that. A figure from 1998 (source unknown) suggests a 20% savings on energy costs from SPD. Later, a study came out that buildings lose 25% of their energy through the windows, so that became the standard value quoted -- as if SPD could magically prevent all energy lossage through windows on which it was installed.
One of the more humorous examples of the 25% figure apparently came from our good friends at InspecTech. The story was, that a pilot (for National Jets, presumably) reported that the cabin of his plane was "25% cooler" with SPD window shades installed.
When it was pointed out that it made no sense to use percents on temperature, since both common scales go negative, the story quickly changed to "25 degrees cooler". But even that strains credulity. Even assuming the Farenheit scale, does that mean the plane's cabin is routinely near 100 degrees? Or perhaps that SPD has some magical refrigeration property that takes that cabin down into the crisp upper 40's? All of this meanwhile, overlooks the fact that airplane windows, by the necessities brought on by high altitudes, are generally insulated roughly as well as the entire rest of the fusilage.
Finally, there's never, to my knowledge, been a comparison between the energy savings of windows with SPD, and windows affixed with a futuristic technology known as a windowshade. This, I strongly suspect, is because the results of such a comparison would be, at best, uncomfortably similar.
None of this, of course, keeps the promotional machine from its incessant claims that SPD is the miracle energy-saving technology that the world so desperately needs.
I just hope the world likes blue.
That's incredible, of course, in the sense of "not credible".
There is doubtless a certain amount of heat blockage inherent in the light-blocking capability of SPD. And the thickness of the glass is marginally increased by the inclusion of an SPD film layer, thus adding a nominal insulation value.
But the claims made (not independently tested, of course) by REFR and its promoters for energy savings using SPD film go far beyond that. A figure from 1998 (source unknown) suggests a 20% savings on energy costs from SPD. Later, a study came out that buildings lose 25% of their energy through the windows, so that became the standard value quoted -- as if SPD could magically prevent all energy lossage through windows on which it was installed.
One of the more humorous examples of the 25% figure apparently came from our good friends at InspecTech. The story was, that a pilot (for National Jets, presumably) reported that the cabin of his plane was "25% cooler" with SPD window shades installed.
When it was pointed out that it made no sense to use percents on temperature, since both common scales go negative, the story quickly changed to "25 degrees cooler". But even that strains credulity. Even assuming the Farenheit scale, does that mean the plane's cabin is routinely near 100 degrees? Or perhaps that SPD has some magical refrigeration property that takes that cabin down into the crisp upper 40's? All of this meanwhile, overlooks the fact that airplane windows, by the necessities brought on by high altitudes, are generally insulated roughly as well as the entire rest of the fusilage.
Finally, there's never, to my knowledge, been a comparison between the energy savings of windows with SPD, and windows affixed with a futuristic technology known as a windowshade. This, I strongly suspect, is because the results of such a comparison would be, at best, uncomfortably similar.
None of this, of course, keeps the promotional machine from its incessant claims that SPD is the miracle energy-saving technology that the world so desperately needs.
I just hope the world likes blue.
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