Online Stock Trading

Anyone who is keeping tabs on my open positions has the potential to have the somewhat justified right to wonder how I feel now, after my large stake in Headwaters (HW) has softened so much. While others in my position might have bailed by now, I’m still more than convinced that the decision to buy as much of it as I thought I could was the best possible decision I could have made at the time I made it. Hindsight shows me that it would have been nice to have waited until say yesterday or even today, but there is nothing in hindsight today that was available to me then. The golden opportunity, from my view of things, was foresight. Here’s why:

Have you ever watched a stock like Google (GOOG) and really wished you could have bought it in say, even September of 2006? Some people did, many did not. At $400 per share at the time, most people felt it was the most ridiculously overpriced speculative play they had ever seen. Even so, for those who had that blessed foresight back then, though they have been rewarded, have been rewarded a mere 67% or so. A mere 67%? (I invite anyone who thinks me completely mad at this point to navigate their way halfway down or so on the right sidebar and take pleasure by indicating such in the new poll).

Almost everyone I knew at the time considered it to be a grossly exaggerated speculation at best. I did too back then, and I still do today. That’ll teach us value investors once and for all. With a Google though, we have a stock that never was a value investor’s dream come true. Do I like the company? Hell yeah, I use tons of their services. Nevertheless, from a strictly investing perspective, it was always speculation, always overpriced, never a value stock by any fundamental measure.

What would a company of today look like if it were a Google of 2006? No, not Headwaters. But Headwaters has at least one thing in common with Google. Hindsight will make people wish that they once had the foresight that only that hindsight will confirm. Besides that commonality, the differences between the two are actually the very things that made me want buy Headwaters when I didn’t want to buy Google. With Google, the hope was that it would keep going up, while the fear was that it was completely overvalued and could come crashing down. However, with Headwaters, all this has become inverted. Now the hope is to get it while it’s still cheap because I fear that it will go up too soon. How’s that for contrarian?

The stock is completely backwards. When the stock, within the last two years, was trading at $40 it should have been trading at what it is today: it’s nearly singular revenue source was set to expire. Now it’s trading so low, but one very important event has occurred: it has done, in my opinion, a very competent job of poising itself to be able to completely diversify its business away from that single source. In all honesty, now is when it should be trading high again. Lucky me.

When I search for articles on such matters like this stock and others, I consistently encounter five to six versions of the same Internet. Complete lack of originality. As a consequence of this, because no one can seem to muster the creativity to write anything uniquely unique, I don’t plan on offering a survey of the company or its recent history. But, because I think that history is of vital importance, I’ll leave it to those who said things first to say what, were I just that bored, I could have essentially copied over here.

Here are some readings and brief thoughts on those readings about the day to day matters regarding Headwaters:

Chasing Value: Headwaters Inc. (HW) an under water opportunity from Bloggingstocks
While I don’t share the author’s apprehensions about the departure of CFO Scott Sorensen in August, I didn’t endure Enron either. I think the article is otherwise well written, informative and offers a commentary unequaled in many respects because of its originality and focus on value related perspectives.

Take It On Faith: Who’s Buying What in This Market from College Analysts
A late addition to the reading list, I found this last minute and have added it because I was surprised to find it on their site. I hadn’t noticed it before (what? I missed something?), but hope too, that Steven Stewart does in fact give shorts reason to cover (and there are still many many shorts).

Headwaters Will Reverse Course from The Motley Fool
Probably my overall favorite because of its length and depth. And of course, also because I like people who agree with me. At the bottom of this article, there are links to other past articles they have written on Headwaters, many of which are very informative. I also recommend this interview with Kirk Benson, CEO of Headwaters: Headwaters Weighs Anchor.