Acusphere, Inc.
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By goodnessgracious
August 11, 2006

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Lost in this discussion of what to do with ACUS, tax loss selling, averaging down, etc. is whether a rational, unemotional, baggage-free investor should be buying ACUS at this price or not. Recent price movement is a red herring; as Buffett / Graham say, Mr Market is there to serve you, not to guide you.

So if ACUS is a good deal at $2.50, then you may want to futz around and get a tax loss, nervously hoping the stock doesn't jump from $2.50 to $5.00 while you're waiting to get back in after your 30-day washout period. You might even buy some more at a very low price. But how that affects your average price is neither here nor there. You should or should not make that purchase based on current price and current worth.

And if ACUS is not a good buy at these prices, then obviously you should just sell for what you can still get and move on to other things.

So what is it? Is ACUS worth $2.50 per share, or more, or less? Or better, is the company worth $57M? How much would AI-700 be worth to a buyer, given current prospects? How much is their factory worth? How much cash do they have (hint: $57M!), and how much debt (hint: $24M)? What is their burn rate?

I am going to look at the recent 10Q and review my position this evening, but my initial take is that there's no way anyone should be selling this stock for $2.50 if they thought it was a good deal at $4.00 a few weeks ago or at $6.00 a few months ago. The news is just not that bad, the company has lots of cash, and there's still a reasonable chance that they will do very well with AI-700.

I suggest this thread be used for fundamental value assessment, with no further mention of price movement or institutional buying or bounces or tax losses or what have you. Could we just go over the valuation again?

Good luck to all,


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