I also learned what can happen if you don't stay with your beliefs and bail on a stock too early resulting in years of kicking myself and muttering of what I should have, could have, would have done.
The company I am referring to is Comverse Technology. This company's storyline sounds like a trailer for the movie Gladiator where Commodus says to Maximus,
"The general who became a slave. The slave who became a gladiator. The gladiator who defied an emperor. Striking story!"
Comverse's storyline goes like this,
"The company who began as a penny stock. The penny stock that graduated to a Nasdaq listing. The Nasdaq stock who became an SP-500 component. The SP-500 component that fell from grace back to the pink sheets. Striking story!
Unless you were a shareholder these last few years.
Even more intriguing was last year's worldwide manhunt for Kobi Alexander, Comverse's CEO for many years, who stepped down last year as a result of an improper options back dating probe that began and is still ongoing.
Mr. Alexander made a lot of money for shareholders but apparently "greed" took over and he probably made a fortune by backdating options at low prices illegally. This was so unnecessary since he was doing what we as average investors expect a chief executive to do and that is increase shareholder value. For this he should be remembered as the model for success building a company from obscurity to an institutional darling, but for some reason he chose the path to riches by cheating rather than staying the course and continuing to build a telecom technology powerhouse.
I was buying this stock for clients at $.18c per share in the latter part of 1989. Yes, i was recommending a speculative penny stock in my early days while building a client base. Why? Because the company at the time represented what every investor looks for when they research a company before investing in it. The company was on the technological forefront developing telecommunication systems that provided messaging services and voicemail solutions. They were signing up customers left and right and these were major telephone giants throughout the world. Their telecom systems were purchased by governments. The company was building a foundation for remarkable growth. Growth that took this stock from $.18c a share to north of $100 per share over a 10 year time frame.
After a short time, I moved from the penny stock firm to Lehman Brothers and began buying stocks that were more mainstream and were household names for the average investor. I unfortunately stopped buying Comverse, and in fact sold what I had for clients in early 1991 and what a mistake that was. If I had held the shares for my first few clients in the early days, I would have been a multi millionaire by now with probably the greatest stock story anybody could tell. But I bailed early and watched the company woo Wall St. and begin it's meteoric ride to SP-500 status. What a lesson, the $100 million dollar lesson considering how much stock I had for clients ($10,000 turned into $8 million in about 10 years). But a lesson I hope all my readers will learn about long term investing.
Today the stock trades on the pink sheets at around $22 per share and Wall St. is buzzing about a possible breakup of the company's divisions which analysts say is the best strategy that will represent good value to investors. Whatever the end result will be, I am adding Comverse to my speculative list with the hopes that the company can put the past behind and move forward at doing what they do best, providing integrated software, systems, and related services for multimedia communication and information processing applications.
Last week Comverse Technology named a new chief executive. Former AT&T Wireless executive Andre Dahan who agreed to take the CEO job on April 30. Could this be the beginning of a new era for Comverse? Time will tell, but considering my history with the company, I am going to give them the benefit of the doubt. Stay subscribed for my entry calls on this stock.
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