Stock-picking

Philips to Acquire TIR Systems Ltd.

Almost two year ago, I was trying to learn the ins-and-outs of the complex world we live in. One of them was the stock market. I found a small Canadian company in BC called TIR Systems that do LED lights. They specialize in do display signs that were many times more energy efficient and last many time longer. They already had Esso and Shell as clients. I thought that it was a great business. True, it was losing money. But it’s a startup. They all lose money. LED lighting technology is being lead technologically by little companies nobody has ever heard of. BTW, this was way way way before anybody was even considering banning the conventional lightbulb.

I kind of lost interest after awhile because the company didn’t seem to be doing anything. I subscribed to their mailing list which gave me regular press releases from the company’s PR person.

Last night, I openned up the business page yesterday and found that my little company, TIR was being acquired by Phillip for $1.60/share. It represented a %16 premium, according to management. I don’t own any shares, but I was excited. I made a good decision back two years ago to see an emerging market and picked one of the rising companies in solid state lighting. Yeah for me!

Then I went and looked at its two year price chart.

The initial price at IPO was almost $6. It was at $4 when I first laid eyes on it. Since then, the stock has steadily gone downward with every new convertible debentures offering until it settled around the dollar-fifty mark. So, if I had money several years ago and invested in TIR, I would’ve lost more than half of my money.

The funny thing is that this is a well respected, well runned, company that had lots of good people working on it. It was providing a new technology (several in fact) that will revolutionalize the way we see the city at night. I still think that it is true. But if I had put my money wher my mouth is, I would have a lot less money.

By comparison, Fairfax Financial Holdings, another company I was looking at around the same time, is now in the $200 range. When I first saw it two years ago, it was at $85. And what does this company do? Nothing. It’s a financial holdings company. Most of its investment is in insurance companies, but the company itself does absolutely nothing except buying and selling shares of other companies. It’s not revolutionary. The average joe won’t miss FFH if it disappear tomorrow. They won’t change your live.

They do finance. They are very good at it. Hence, they have very rich shareholders.

I suppose TIR is very good at lighting too. Hence, they have shareholders with very light pockets.

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