Wednesday, September 10, 2014

Value Fail: Premier Exhibitions

I'm able to make purchase decisions relatively easily. The decision to sell, however, is never an easy one for me, whether a stock has risen or fallen. In the case of Premier Exhibitions, I don't think it was the actual purchase that cost me; after all, this was a profitable company when I discussed the stock as a potential value investment! Instead, it was my unwillingness to sell when business conditions changed that ended up hurting the most. I wasn't actually able to sell it until I finally recognized the mental block that was stopping me from giving up.

I believe I was worried about feelings of regret had the stock popped after I sold. Unfortunately, this was a costly feeling, as the stock has done nothing but tank as I've owned it. If it were just the price that fell, I would have no problem with my willingness to hang on. But in my opinion, the company's position and decision-making has done nothing but deteriorate. The company has moved from profits to losses, while those in charge want to borrow money in order to take risks, rather than monetize existing assets that appear to be losing value.

What made this mental block particularly pervasive is that Premier has been hinting at a potential sale of its Titanic assets for quite a while. As such, I didn't want to sell right before an asset sale was announced. I believe this feeling made me blind to the deteriorating business. Unfortunately, this blindness cost me a pretty penny!

I know this stock is widely held among value investors, so I hope it ends up working out. I do feel better, however, now that I've re-allocated this capital into the hands of insiders that are adding rather than subtracting value.

1 comment:

ברוך גרינפלד said...

Hi,

Thank you for your wonderful blog and thanks for sharing about PRXI.

I also gave up on them, great asset, poor management for a long time and changes are coming ahead.

Baruch

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