CVSL Update and the Open Letter to John Rochon on Seeking Alpha
An open letter to CVSL’s John Rochon was published yesterday (click here to read it) after the market opened and it will be interesting to see how the company responds. We believe that CVSL management should take advantage of how low the stock has fallen and it is hard to conceive of a way to create better long-term value than by offering a program for their sales reps to become owners (shareholders) of CVSL. Though the Dutch Auction Tender Offer approach mentioned would give us the quickest boost to the $2 range (likely price range given the current trading price), we believe that investing in the sales force through a non-dilutive program to help as many reps as possible become “owners” of the company through stock ownership would be a better long-term investment. We hope that Longaberger, Agel, Kleeneze, Project at Home, Tomboy Tools and other company sales people will join with us in pushing for some kind of stock purchase program that would be available to all sales reps. The sooner this happens, the better because we believe the stock is going to move significantly higher over the remainder of this year when investors see the larger divisions (Longaberger and Agel) start to turn a corner and the opportunity to buy CVSL shares in the $1.50 range may not be around very long.
Speaking of Longaberger, all reports from the home front suggest that the Longaberger convention was a hit with sales reps, old and new. Longaberger CEO John Rochon Jr. indicated when pressed that Longaberger sales are trending better than expected and more importantly, he indicated that the number of new sales reps has grown “exponentially” over the last 60 days. This is a very big deal (particularly coming on the heels of such a long fall in those numbers) because big revenue gains usually come soon after we start to see growth in the number of new sales reps. This is the strongest indicator we have received yet that tells us the Longaberger business has turned a corner and we will begin to see material growth in Q3. We strongly encourage participants in the Groove community to buy as many shares as possible while the stock is still down this low.
For Longaberger, Agel, Kleeneze etc. sales reps, the time is now to let your management team know that you want to own a stake in the company and given that it will take a little time to get one set up, you may want to open an Etrade, Ameritrade, Fidelity, etc. brokerage account and just eat the $8 commission to go ahead and buy CVSL shares. If it takes a few months to get an employee stock purchase program in place, CVSL could be trading at a much higher level by then.
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