Nate,
Thanks for the heads up. This is good news. I wouldn’t worry about it.
People are always making bad decisions. Here’s kind of what I’m seeing. Great company, great price. I think some of the growth over the past years is attributable to favorable currency rate shifts, but honestly, all I’m looking for is the currency to stop swinging. Even if the Zloty drops to pennies, they’ll get a new currency and CEDC will price based on that currency… right?
I think you’re right about correlation with Russia. I also think that Poland’s currency is seen as high risk because of how the home mortgages are structured. Some guy replied to my article on CEDC:
CEDC is not a buy at these levels. Bradford, look at what the market is telling you. There is a major currency devaluation going on here. The Zloty may easily depreciate by 200% or more in the next 6 months (from current Zloty/USD exchange rates).
There’s no trust in the currency. There’s no trust in the exchange rate. It’s a floating rate that cannot be stabilized right now. I live in Poland and I’ve seen this before. No trust in currency = no trust in economy = no trust in CEDC. Don’t be foolish. It’s going to be years before our economy recovers from this and the Zloty may not even exist in its current form. Throw your calculations out the window. The Zloty is not like the American currency. It will devalue and not regain value. You don’t understand what’s happening here.
A link to my latest valuations:
http://seekingalpha.com/article/114871-cheers-to-the-zloty#comment-364706
I’m to the point where I’m ready to admit that I don’t know the future or the extent of the devaluation in the Zloty.
Sucks, but you never make money betting with the herd. The herd is looking for the exits. If you read enough of these (link below), then that helps you get a feel for the elasticity of the economy. I will admit, I did not see the whole Zloty thing coming 5 months ago. I’m feeling positive for the future. The past is 100% predictable, and if I’d have known, I’d have been short across the board. Is there still risk with CEDC, yes. I’ve been cleaning up some of my position to allocate into safer plays.
http://www.kmm-language.com/poland_00000a.htm
Glen Bradford
Purdue University
Masters in Business Administration
Bachelors in Industrial Engineering
School of Engineering Student Ambassador
www.glenbradford.com
From: Nate T[mailto:nate
Sent: Monday, January 26, 2009 4:04 PM
To: gbradfo
Subject: CEDC mystery
Hey Glen,
You’re definitely right on about CEDC’s stock price relationship to the zloty. (Which is also a bit silly when you consider that most of the company’s expenses and debt is zloty-denominated.) The action in the Russia’s MICEX also seems corollate with the stock to a certain extent. However, it seems as of late that there have been big swings in CEDC with no apparent catalyst from Zloty, Eastern/Central European markets or company news. Today, for example, it’s down 5 percent, but Zloty is up 1.6, MICEX up 10 — and the Polish markets have also seen nice gains. As a big believer in the company and the stock, it’s a bit frustrating to be swinging in the dark so frequently when attempting to trade around a core position. Any clues as to what is making this stock move — hedge funds having their way with it, perhaps?
Cheers,
Nate T
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Corporate Finance Class:
I sit through corporate finance class in a blind panic because I realize that the idealistic viewpoints they are teaching the nations “brightest” MBA students are inherently flawed. I just can’t wait to get out and buy into companies that are low risk/high return type vehicles. And, there are so many out there! I’m bringing sexy back. GHII, NWD