Goodbye, Cree

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By markoose
February 7, 2002

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Hey, Cree Fools,

For this message I thought it would be appropriate to use proper capitalization and punctuation, for a change. ; )

Over the past year or so, I've become increasingly aware of too many things that I didn't like about Cree.

Granted, there are some things that seem good... but the (perhaps perceived) bad things eventually more than outweighed them, in my eyes. Are the good things that are still there really there? Quite possibly, yes. But probabilities (and the clich�) say that where there's smoke, usually there's fire. And things have smelled more and more fishy to me as the past year or so wore on. Smoked fish is not my idea of good eatin'.

I could very well be wrong. For the longs' sake, I hope I am wrong.

This is not a recession/economy-specific thing. Neither is this a price thing (i.e., the price has been going down). Finally, this is not an "Enronitis" thing (as a part of me has been increasingly "suspicious" for a year or so now, well before the Enron implosion ever happened).

No, my Fellow Fools... this is a Cree thing.

To me, things don't seem "right" there. And I don't like it.

Suspicious revenues, contracts, relationships, investments and write-offs, signs of playing with the books too much, the "promise of the future" of new product categories that never seem to materialize to the bottom line, the lack of management honesty and integrity... many of the signs are there, in my eyes. Over the years I've seen many of the similar signs in other companies, which subsequently more often than not turned out true and eventually caught up with them. And this is a very serious issue for me as an investor.

As some have said, including myself, this is a "story" stock. These "story stocks" usually require a good deal of faith and hope and luck and trust. Over the past year, I've increasingly lost a great deal of that faith and hope concerning Cree. This loss, combined with the content in the preceding paragraph, has led me to conclude that there's only one right thing for me to do.

Regardless of what happens to Cree the company and CREE the stock in the future, I've done the right thing. It's the only thing I could do. Why? For the reasons mentioned above. Ultimately, in the long run I could be "wrong," that nothing is really fishy or bogus, that people including myself over-reacted... and the stock could skyrocket in the coming days, weeks, months and years. In that sense, yes, I would have made a mistake. But once trust and faith in a company is lost due to various reasons and serious issues, it can never be the same again.

In case you haven't figured it out by now, I sold my position today -- all of it. I sold at a decent loss -- my worst loss ever, in fact. "Fortunately" it has always been a small position in my overall portfolio. I'm not particularly happy about it, as I hate selling at a loss, and maybe that dough could have been used better elsewhere. Perhaps I didn't get the best price I could have gotten months or even weeks ago. Heck, I very well may have sold at the worst possible time, price-wise.

But I still sold for all the right reasons as an investor.

It was a tough decision to make, and I thought about it long and hard (maybe a little too long). Even though emotions aren't (or at least shouldn't be) involved in selling decisions, it never gets any easier.

Goodbye, Cree... I wish things could have worked out better between you, my trust and my money.

And finally, good luck to all.


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