Member Info for LunaNera

True.

However it is the "smoke" pointing Carson to look deeper into the company's governance and operations. IIRC Manolete has exactly the same accounting practices, yet it appears off the MW radar (similar negative cashflow). Go figure.

Thanks for shedding a light on this. Back to the financial reports....

Explaining why their cashflow is negative since 2014 despite booking positive net profits throughout would certainly help.

Totally with you in this. Thumbs up.

Selling securities before they matured is a guaranteed method of losing money.

There are numerous reasons why people sell their positions. In Woodford's case he pretty much had to sell everything that was liquid, regardless of maturity. A substantial portion of his portfolio was illiquid -- which is what landed him in trouble with the regulator.

BUR had a very nice run, even though it received a haircut once MW discovered the leadership with "their hand in the cookie jar."

It all comes down to a few simple things.

A) do we need to adjust our estimates of intrinsic value and does this adjustment still make it an attractive proposition (I answered that with yes)

B) Is the company's business model broken? (I answered that with no).

Although difficult to understand and predict, the court sheets don't lie and BUR has shown some rather amazing performance. Their challenge is how to account for their business activities so it gives a fair view on their intrinsic value. Which is where MW attached them and managed to stir huge sentiments against their operations.

If I am right, then this is a nice opportunity to buy into a rather phenomenal business at a discount. Over time this will lead to market beating results.

If I am wrong than I may lose my money, but that's a bit difficult to see since the security trades near NAV.

I would have never bought into BUR at previous (lofty) valuations. But at these levels it's certainly worth a wager.

A business isn't failing because of someone's opinion on price they are prepared to pay for it. Markets aren't efficient.

As Syoun11 correctly stated, it's all down to results.

For those who think this company is doing a great job and this accounting 'scandal' is temporary, then rejoice and build a meaningful position with a nice margin.

Otherwise it's probably advisable to sell.