* Click on pictures for a larger view. For those of you who haven't been following the heated discussion after Jay posted his report on OVEN, take a look at http://mcgillinvestmentclub.blogspot.com/2006/03/anonymous-comment-on-oven.html"
Alright, I've posted two charts, I'll be talking mainly about the first one, but take a look at the second chart to see some major events (splits, earnings, etc) .
First off take a look at the all time chart http://finance.yahoo.com/q/bc?s=OVEN&t=my.
Notice that despite the runup through the first half of 1997, the long term has been bearish.
The Subway deal saved the stock and a major runup is followed starting roughly november 2003.
Alright, focusing exclusively on the past two years (follow the first chart) you can see the fast run starting early novermber and topping late december, notice the weak volume support, especially after hitting the top, now the second weak runup has formed a classic technical favorite pattern of head and shoulders, after which the stock has broken the neckline on very heavy volume. I can't quite figure out what caused this (fundamentally), but a 1:3 stock split was declared right before the fall and then it's all downhill.
Fast forwarding to June 2005, Jim Cramer comments and much promised speculations for a deal with starbucks or a second deal with subway caused an extreme fast run on heavy volume (greed + short covering + triggering stop buys) , but notice the strong resistance on $20, which is the right shoulder on head-and-shoulder pattern. Quite obvious at this point.
Notice the triple top formation with nice volume supports from mid June to mid August, each top lower than the other and declining volume. Even without trendlines the move is obviously bearish.
The most relevant part right now is the extensive trading range of November - March right before the earnings disappoitment. Also notice the bearish move before the announcement.
After the fall the movement has been quite bullish, which could very well be shorts covering their positions. Also as Jay said, short ratios are published about biweekly (depending on the exchange) and if someone shorted and covered within that period it wouldn't show up. Take a look: http://www.shortsqueeze.com/index.php?symbol=oven Average days to cover is roughly 18 days.
I looked up the insider roster, didn't really see any insiders buying the stock. Keep in a mind that an option exercise doesn't count. The only thing I care about is an insider buying with cold hard cash, and lots of it. So if some insider's salary is 200k and he's buying 150k stock of his own company, then I consider that significant.
I don't think the stock is going anywhere and is likely to stagnate; however, there should be quite a good buildup of stopbuys around 13, but the large positions stopbuys are between 15-16. Breaking north of 13 could easily generate enough push to trigger those higher ones. This is not something that I'd like to bet on as odds are not favorable at this point, but if the move happens then you can be sure that I thinks odds are that the breakout would easily reach 16 and you would have some time to get on the train provided you act fast. The volume by price chart speaks for itself, you can see that $13-$16 trading range is where most of the action has happened, and in near future these are the strongest supports/resistance.
From a fundamental point of view, I have to say it doesn't seem much prospect for the stock. I wouldn't say anything much more, cause it's nicely put in Jay's report.
posted by Kaveh at
4/10/2006 02:28:00 AM
5 Comments:
kaveh-love the analysis. Dude...can't wait to hear about you in the business. Let me know how interviews, etc go and you know you can always look me up if you need a hand. Crazy to see how well you guys have done and how far you've all come in just 18 months. Pass it onto the next generation mate!
Keep well-Greg
By
Anonymous, at 2:06 AM, April 11, 2006
I sent a comment to this post. It was a short history of this stock since the new management. Did you get it?
By
Anonymous, at 11:41 PM, April 12, 2006
I guess it didn't come through, so I will try to re-create it again.
This technology and the company have been around for about 11 years. The founder and original owner tried (unsuccessfully) to build the company himself (Bogatin). Good inventor, but not a good businessman.
Subway was testing the machines in Puerto Rico as long ago as 2000.
In Jan 2003, the stock went under $1 and was de-listed from Nasdaq. The company was hovering on the brink of going under.
About that same time, Richard Perlman, Jim Price, and Al Cochran were finishing up their homerun on Practice Works (dental office software) by selling it to Eastman Kodak. Perlman was 57 and very wealthy after the deal. He was considering retirement. Cochran (CFO) was mid 50's, and Price (Pres and CEO) was 40ish and not ready to retire. Some friend of theirs brought them the deal and the story is that it was too good to turn down.
Subway was set to sign up, but Turbo had no money. Perlman has the money, buys controling interest in October 2003, cleans up the books, debt, management, and is credited with closing the Subway deal for rollout in March 2004, when in fact it was just his money, Subway was ready if Turbo could perform. (some of that part is my hunch and conjecture based upon info I have gathered)
Not sure of the date of the reverse 1 for 3 stock split, but when the Subway deal was rolling, and right after the company reports its first annual profit in history, the company floats a secondary offering. 2.9 million of shares of company stock and 2 million of Perlman's stock. It sells in Jan 2005 for 20.50.
After the secondary, the stock tanks back to 10 in April 2005 after having been at 26 in Dec 2004. Why the rapid fall, not certain.
At this point and until now, the company is owned 51% by insiders (about 35% by Perlman) and 46.5% by institutions. Goldman Sachs, Oberwies, others. 44% of the float is held in short positions.
After the tank, Perlman goes on the circuit promising more big deals like the Subway deal to be announced. He says on Cramer in June 05 that he in confident of at least two major deals before year end. Stock soars quickly to 12, 15, 16, finally 20 in July. There may or may not have been insider sales in August 05, I cannot tell exactly. Stock was 13-16 then.
Perlman continues to make the same two big deal promises at Quarterly conference calls and at an investor conference in Dallas in November 05. He continues to use the term, "by year's end."
Year end comes with no announcement. More speculation. Cramer comes on CNBC at 3:40 pm closing bell segment and teases the market with a rumor of a deal between OVEN and Dunkin Donuts. Stock shoots up one full point in 15 minutes to 15.98. It closes that day at 15.30. No annoucement, no annoucement, and the stock trades down for over a month.
Cramer gives the stock a "dont buy" on Feb 28th. It was at 13 then. Motley Fool predicts trouble.
HMS Host announces a master purchase agreement with Turbochef. Brief one day one point rally.
Stock limps into the March 6 earnings report and conference call. Perlman does a mea culpa, says he never should have ever said anything about future deals because his customers never want publicity. He blames it on non disclosure statements, but states that none of the alleged deals have fallen through, they just cant be commented on.
The revenue report of 4th quarter 05 missed estimates terribly. The stock tanks again the next two days to hit a low of 10.12.
Since the CC, no news execpt that Wawa convenience stores have gone with a competitor, Merrychef.
Two weeks ago, Turbo was the only oven shown at the Dunkin D convention. Turbo was showcased at the Innovation Fair at the convention. they had Charlie Trotter there demonstrating the oven's versatility.
Everything points to continuing relationship between OVEN and DD and OVEN and SBUX.
If you want any more info, let me know.
TX.
By
Anonymous, at 12:45 AM, April 13, 2006
Another assumption in Jay's report is proving to be possibly incorrect. Jay's research was that it was doubtful that Dunkin Donuts would buy any TurboChef ovens. Wm. Blair today sent out an email to it's subcribers telling them that DD is already using Turbo ovens in select locations including their new prototype stores for future expansion. Blair claims the employee feed back is "generally favorable" and that discussions with employees is suggesting that there could be a TWO oven rollout to all existing 4800 DD locations in the near future. Certainly not a confirmed deal, but Blair put enough creedence in the rumor to put its name to it.
By
Anonymous, at 5:46 PM, April 13, 2006
Hmmmm, I guess nobody wants to discuss TurboChef any further.
By
Anonymous, at 12:05 PM, April 18, 2006
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