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Recently, the Forum has been bombarded with threads re CLND - Colombo Land and Development Company. All you hear 24/7 is CLND CLND CLND ! i sometimes wonder whats so magical about this stock. i dont have anything against this company / stock, but the way some people talk about it, you can be forgiven to think this is the only "gem" on the CSE ! i too made some good money on this stock whilst converting warrants at Rs 3 (buying warrants around 7-10) and selling CLND around Rs 50 a few years back. However way you look at it, the fundamentals are weak. CLND is trading at 200 times its earnings, 3 times its Book Value and 80 times its Revenue and has Zero cash. Fair enough their seems to be some buzz on the 14 acres Pettah property and development prospects with the Liberty Plaza Complex, both leasehold properties. but they will need plenty cash to develop these properties through Debt, Rights Isuues or through Strategic Alliances. All these will further dilute value and shareholders will not have any intrinsic benefit in the intervening period. How are they going to generate huge profits to justify these handsome share prices ?
Perhaps the only reason to be excited about this stock is the names of the connected parties, Directors and Broker networks that promote it. and the bigger fool theory will play its part well in this case.
Make no mistake, this horse may run due to the greater fool theory. but for me, better & safer horses to back with better prospects for a good nights sleep.
This quotation from Warren Buffet is interesting in this CLND regard.
Beware when investing turns into speculating
"The line separating investment and speculation, which is never bright and clear, becomes blurred still further when most market participants have recently enjoyed triumphs. Nothing sedates rationality like large doses of effortless money. After a heady experience of that kind, normally sensible people drift into behavior akin to that of Cinderella at the ball. They know that overstaying the festivities that is, continuing to speculate in companies that have gigantic valuations relative to the cash they are likely to generate in the future will eventually bring on pumpkins and mice. But they nevertheless hate to miss a single minute of what is one helluva party. Therefore, the giddy participants all plan to leave just seconds before midnight. There’s a problem, though: They are dancing in a room in which the clocks have no hands."
Source: Letter to shareholders, 2000
Perhaps the only reason to be excited about this stock is the names of the connected parties, Directors and Broker networks that promote it. and the bigger fool theory will play its part well in this case.
Make no mistake, this horse may run due to the greater fool theory. but for me, better & safer horses to back with better prospects for a good nights sleep.
This quotation from Warren Buffet is interesting in this CLND regard.
Beware when investing turns into speculating
"The line separating investment and speculation, which is never bright and clear, becomes blurred still further when most market participants have recently enjoyed triumphs. Nothing sedates rationality like large doses of effortless money. After a heady experience of that kind, normally sensible people drift into behavior akin to that of Cinderella at the ball. They know that overstaying the festivities that is, continuing to speculate in companies that have gigantic valuations relative to the cash they are likely to generate in the future will eventually bring on pumpkins and mice. But they nevertheless hate to miss a single minute of what is one helluva party. Therefore, the giddy participants all plan to leave just seconds before midnight. There’s a problem, though: They are dancing in a room in which the clocks have no hands."
Source: Letter to shareholders, 2000
