i agree that there is no major fundamental problem with bellamys, but the problems with china distribution will not disappear overnight and there is nothing the company can do to fix those issues as it is driven by competitors dumping product.
it is a good thing that the company is freezing until some further clarity is gained and further guidance can be provided, however there will still be a lot of share dumping as soon as trading resumes, because people will sell first and then plan to buy back later once the trading situation improves.
i personally wont sell yet if the sp drops more than another 20% immediately because i believe the short term distribution issues will be resolved and it will bounce back above 5-6 within 12mo.
trying to get out during a panic selloff and then buy back in near the bottom is a sure fire way to lose more money than just holding through the turmoil, -and its a classic mistake that rookie investors often fall for.
if bal's business model is fundamentally in trouble, then its better to sell out asap no matter how much of a capital loss you have to take. i dont, however, believe they are on their way to liquidation.
my only worries are:
1) that the class action will be a drag on the company in terms of sentiment, bad press, and legal costs. i dont think it will affect customer demand itself, the new mums dont really care if the investors lost money because of china export demand.
2) that the board has to go, and that the new board will have to be extremely cautious and conservative in future guidance, which will drag the sp down initially but will lead to upside surprise in results later down the track.
BAL Price at posting:
$6.68 Sentiment: Hold Disclosure: Not Held
