My friend and colleague, Sri Peruvemba, has a personal rule of thumb that I call “Sri’s Law”. It works like this; whenever management gives him a timeline, he multiples it by Pi. Which is a very rough way of saying, “nothing ever gets done on time.” And, it’s surprisingly accurate.
What Sri’s Law tells investors is that we need to exercise patience and expect delays. Humans are optimists and management teams are no exceptions, especially when speaking to investors. To which I say, relax…the catalysts are coming, just not on the original timeline.
However, relaxation is seldom the case as investors tend to be a nervous group and, as a timeline approaches, they seem to be scared to buy, preferring to sell stock. This selling can often accelerate if shares are weak, leading to a mini selloff right in front of catalysts.
We’re seeing a classic example of this playing out right now in shares of Patriot One. The Company’s biggest possible catalyst, approval of their device by the FCC and IC regulatory agencies, is rapidly approaching. However, some investors seem to think they should have achieved this goal by late July. Thus, shares, which had been rallying in advance of approval, have taken a sharp downturn in the last several trading days.
When stocks trade down, it’s easy to assume someone knows something. That smarter people than you are selling, and that you need to get out. Quiet times for shares can lead to trading patterns, especially during the dog days of summer, that make you think you’re crazy to own a stock as you watch it get slapped around daily.
I find that it’s darkest before the dawn. That, as an investor, while you need to consider all possibilities, you can’t let the share price movement dictate your thinking. What I’m saying is that we need to consider Sri’s Law and realize that any delay in approval is not necessarily a red flag, but is something we should have expected to happen. And, therefore, a selloff in front of a delayed approval deadline is not necessarily a cause for concern, but, rather, a buying opportunity.
This, of course, is dependent upon Patriot One receiving approval for their product. I believe this is going to happen, and soon. Here’s my thinking on this.
The Company has already been through several communications with the FCC. They have hired 3rd party experts to help them tailor their product to meet FCC regulations. According to the Company, they have passed most of the required tests and they believe their product is ready to pass the rest of the regulatory hurdles. They have clearly stated this on numerous occasions.
I believe that Patriot One, with the aid of their 3rd party auditor, will be passing the last of the required tests in the near future. Once this happens, both FCC and IC approval will be following shortly behind. There has been no indication whatsoever that obtaining approval is at any risk. Simply put, the stock is weak based on investor fears around some perceived delay in approval. A delay that Sri would tell us is to be expected and not feared.
When the Company receives approval, the floodgates are opening. They have sold out production through year end and then some. This was announced months ago and I’m sure the pipeline of prospects has only gotten stronger since. Getting approval is the key catalyst for Patriot One, after which it’s off to the races. Anyone who is selling in front of this, I say to you “I’ll buy them”.