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I have been watching with some indifference TLS over the last few years, having once been a not insignificant shareholder; taking decent size parcels in all three tranches, but cutting loose not long after. Despite all the upbeat chat at the time of privatising I have always believed they not only would suffer for many years from being a government department despite being so called ‘privatised’ but also that they would always be a political football with too many masters. And the most telling disadvantage was they were a ‘dead in the wall’ organisation with sunset technology in a sunset space. And because of the political issues it could not move fast enough to move to sunrise strategies.
Before I get too carried away we must look at the chart:
click to enlarge
I just love simple line charts. And when I see something like the above I always think who is still buying and why. Those who are buying obviously don’t look at the big picture. You would think one’s focus when we see such a chart is more – ‘how can I get off this sinking ship rather than how can I get on board’.
You may well say it is all well and good to make such statements after the event. But in fairness I have been calling TLS down now for some years and right now there are many investors who hold stocks that will follow the same path as TLS.
You must decide what is your criterion for exiting using the big picture. A simple trend line to me is the most basic and I have written about this many times over the years in TTN.
Of course I am an ardent Elliott user and if I was to go back to many points in time over the last few years there would have been numerous sell signals.
But today I get the following:
click to enlarge
A rally – but yet another sell down. Why? Because frustrated shareholders are selling any rally. So we may now see TLS down to sub $2.50. But can it go lower?
The answer is yes but we will have to review that once the current Elliott pattern has had time to unfurl.
Enjoy the ride
Tom Scollon
Chief Analyst
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