GT Technologies warned in August

October 10, 2014

There’s been a lot of hand-wringing over the past few days about GT Technologies, which as most people know, filed for bankruptcy earlier this week. In the press release, CEO Tom Guttierez said that “today’s filing does not mean we are going out of business; rather, it provides us with the opportunity to continue to execute our business plan on a stronger footing, maintain operations of our diversified business, and improve our balance sheet.”

Investors didn’t quite see things that way. The stock declined over 90% on Monday and has spent the past few days gyrating wildly (up about 50% on Tuesday, down 40% so far on Friday).

What’s really interesting here are the number of people who have expressed shock — shock — over what happened. As this Zero Hedge piece cheekily noted, even Jim Cramer was caught off-guard, having pumped the stock. This ValueWalk piece has a good round-up on the various sages who were also surprised.

Clearly, none of these folks were reading the company’s SEC filings and the significant new warnings about the company’s relationship with Apple Inc, which is what caused the stock to rise so sharply in the first place. Because right there in the 10-Q that GT Advanced filed on Aug. 7 were enough new risk factors to give anyone pause. We highlighted these changes for our subscribers to footnotedPro on Aug. 7. Here’s what we said at the time:

Screen Shot 2014-10-10 at 11.46.02 AM

At the time, GT Advanced was trading over $15 a share and while the stock continued to climb to over $18 by the end of the month, we knew from experience that companies don’t start adding all sorts of additional disclosures if everything is fine.

We think this is just another reason why a subscription to footnotedPro pays off for subscribers over and again.

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