I am not going to harp on about the lessons that GSW investors...

I am not going to harp on about the lessons that GSW investors have learnt to date however, one of the biggest red flags is the "talk" of takeover.

That to me means that management are not confident that they can turn a profit in the foreseeable future and are hoping someone will come along and offer them a premium based on "potential". It happens, but not often enough to be considered when evaluating a company's worth.