(HOKU) Hoku Scientific was a big mistake, keeping it is a money suicide… June 5, 2006Posted by deminvest in Blogroll, HOKU Scientific, investment, My investing mistakes, stock I own, stocks.
… which I will commit. I think I will keep HOKU. I will keep it because I am after all a proletarian investor. Unprofessional and sometimes I follow a wrong strategy even when I see it is wrong. I bought HOKU at $7 a month ago. I should sell it now at 4.2, but I can't admit to myself how wrong it was buying it. So I keep it hoping that for some magical reason it will go back at 7 and maybe arrive to 9.
HOKU will not.HOKU produces "Proton exchange membrane (PEM) fuel cells". Do you understand what it means? I don't. That should have been a very good reason not to buy. There is an investment rule that I usually follow: "Don't buy what you don't understand well". Anyway I think those membranes are used to produce Hydrogen fuel cells.
The main reason for buying HOKU was the fact that it is one of the few research high tech companies operating in the new energy sources business and making some earnings. I saw oil price go up, I like very much my battery operated electrical bicycle, I saw some earnings, and so I just threw $1000 into it.
HOKU last year had Revenue 5.51M and Earnings of 1.34M, which is very little for a company 68 M dollars expensive. The big problems are:
1) The company will probably not grow this year.
2) The company will probably not make many earnings this year.
3) Hoku's 32 y.o. Dustin M. Shindo shocked investors (myself included) saying he will open a new plant to build fuel cells for solar plants.
Solar plants have very little to do with what the company has been doing so far. Investing heavily in a domain totally new for small 20 employees HOKU, seems to me (and to the market which sent HOKU 40% low since I had the brilliant idea to buy it) nuts totally and a proof that even Dustin does not believe anymore in Hoku's core business, which was what in the first place convinced me and other desperate proletarian investors to put money in that sand box.
HOKU is the stock that convinced me to open a new category: my investing mistakes!