I couldn't resist adding another 1% or so. Psychologically I love the idea of buying cheaper than either of the directors

I reckon you might get more chances to do that @Goldfish - the bargain hunters were active at the start of today - see the one-day chart, below right. No doubt spurred on by the Change-of-Director's-Interest-Notice---Deena-Shiff.PDF posted to the ASX before the open this morning alerting us that Deena Shiff had bought 2,711 PME @ $126.67 on-market on Friday (13th Feb), and that positive sentiment got a little kick-along at 10:59 am AEDT with the Change-of-Director's-Interest-Notice---Anthony-Glenning.PDF that a second PME director, Anthony Glenning, had bought another 2,080 PME @ $119.81 per share on the same day - Friday 13th, the day after PME reported and dropped -23.88%.

However very soon after that 10:59am announcement and the immediate rally from $118 to $121.32, the sellers were firmly back in control and it was all downhill from there, with an additional -$1.24 drop occurring in the CSPA; the last trade before the CSPA was @ $118.21, and the closing auction determined a final close of $116.97, so they sold off all afternoon and showed particular weakness at the close, which is, again, still bearish.

There are more buyers and bids left in the market at the end of the day than there are sellers and offers, but the smart money trades at the open and the close and both were bearish today which suggests that there are plenty of sellers prepared to dump their shares without lodging orders overnight or leaving them in the market overnight - there actually appears to be a lot of selling "at market" during the day rather using limit pricing, which, again, is bearish. For now.

They remain on my watchlist, but in the immortal words of Mel Gibson's William Wallace in the 1995 film "Braveheart"...

...because you'd be brave to be buying them while they remain in this downtrend, and, in my opinion, timing is the key.

I can't pick the bottom in real time, but I can usually see it with the benefit of hindsight, and that's enough of an advantage most of the time to keep me from buying in way too early.

Averaging down is likely still a sensible strategy if you already hold, but buying your full allocation as a new position while they're still in this downtrend... yeah, nah, not what I'd do.

@Bear77 Yes I think you may well be right

I found it interesting today that, despite the director buying, PME was the only one of the major Aussie Saas stocks that finished down for the day.

WTC up over 12%

XRO up over 7%

TNE up over 5%

PME down 1%

I don't really see a reason for the divergence

Thankfully I still have some capacity to buy more PME, should prices get any cheaper

Spot on @Bear77.

You may have elucidated on this elsewhere, but if you care you regale us, would you be able to sketch the signs you are on the look out for to determine that the trend has truly turned, before committing more capital to a name in a firm downtrend like this?

Thank you in advance for your wisdom as always!

Normally @thunderhead I'd want to see a company's SP rise for at least 3 days in a row, just to prove that the selling pressure had dissipated enough and that the SP was recovering, however today's trading in PME is VERY bullish - have a look at this one day graph - which is for today so far:

The momentum has increased through the day without any announcements by the company today, so I reckon today's a great sign and I've just taken a small bite (in my SMSF) as a starting position. I'll wait and see how they close tonight and trade tomorrow morning before making a decision on adding a second tranche (2nd bite). As I said, I'll always miss the bottom with this strategy, but I'll also hopefully avoid watching the share price keep dropping after I buy. That's the idea anyway TH.

@Bear77 Yesterday's price action provided a glimmer of hope that most of the selling was exhausted. I indicated on Friday that I was looking for one more low yesterday before an intraday reversal with the stock closing near its highs. 

Well we got the new low in the morning at $113.67 and then the intraday rally to a high of $121.32. The only thing we didn't get was the required close as the stock closed in the middle of its range and lower than its open thus giving a red candle. 

Whilst I did buy some more yesterday I left room for additional purchases as the closing price didn't give me complete confidence that the low was in. However as you say today's price action is very bullish so let's see if it can hold most of today's gains. 

So, @OxyBBear do we have our answer? They dropped just -1.25% in the CSPA, from last trade (before 4pm) @ $127.55 to close at $125.96.

It was a small drop but enormous volume in the Closing Single Price Auction according to Commsec, compared to the much lower volume traded during the day prior to 4pm.

So there were still sellers there at the close but it appears that there were enough buyers there today to soak up most of that selling volume. I'm getting more comfortable with buying more PME for sure; let's see how they open tomorrow morning.

Disc: Held (starting position this arvo).

@Bear77 , the huge volume was a good sign as we didn't get that the day before. However from my experience companies that miss expectations usually underperform until the next result or until they announce some positive fundamental news.

Now that we have a green candle I think what I would like to see is a retracement that results in a higher low and then a higher high to signal an uptrend which will give me comfort to buy some more, albeit at a higher price. 

Fair call @OxyBBear - and today doesn't look good:

I just sold that starting position I initiated yesterday and bought more LYL instead which were sold down to as low as $13.18 this morning - but have been recovering since then:

They slightly lowered their FY26 full year revenue guidance while retaining the top end of their previous guidance and have also slightly lowered their full year earnings (NPAT) guidance, but gave very positive outlook statements and they've been sold off first up today like they were now ex-growth. They have also declared a fully franked 22 cps div, which is +120% higher than the 10 cps div they declared 12 months ago for the first half of FY25. So, as I expected, the divs are ramping back up again now that the SAXUM stake has been paid for. Nothing to be concerned about in the LYL report, so I loaded up, with some of that money coming from me selling out of PME. It's in the nature of what they (LYL) do that they will have lumpy revenue and earnings, but if you look at them on any 5-year rolling period, the overall trajectory in up and to the right. So not concerned with this report.

I'm going back to my original plan of waiting for PME to close in the green for three days in a row, minimum, and then I'll have another look,

I just got home from running some errands and I closed out two real money trades that I had in the market to cover part of the real money LYL top-up buy I put through earlier, however I forgot that I'd lodged a buy order for PME here on SM last night - which was a top-up as I already held 7 PME shares from years ago when they were under $50/share, not a big trade but I would have cancelled it if I remembered, no matter, looks like I just picked up a couple more PME here @ $123/share. Not a bad price, just not in line with my strategy of waiting for three days of green-on-the-screen before buying. I'm chopping and changing my mind too much. There's a lot going on. I should stick with my first instinct instead of second guessing my strategy due to one positive day (yesterday).

So I sold some in real life earlier this arvo, then ended up buying some (unwittingly) here (at a slightly lower price). I was a little underwater on the ones I sold earlier today that I had bought yesterday, but nothing significant, around $1/share, and it was a small position anyway because it was supposed to be a first bite, or dipping my toe in to test the water. Insignificant outcome.

Very happy with my LYL top-up however. In real life LYL remains my second largest position behind GNG because of both GNG's recent price rise and a GNG top up I made recently (another 10,000 shares). With GNG's contract win announcement yesterday, I'm feeling confident that they'll report well next Wednesday [Note: Now brought forward to Monday 23rd Feb], but if they don't I'm likely to top that position up yet again because I have very strong conviction in GNG now, even more so than LYL, which I wouldn't have thought was possible 12 months ago. My real life GNG position (40,000 shares) is worth $206 K based on GNG's record (best ever) closing share price today of $5.14.

BTW, getting back to PME, I wonder if we'll see some serious broker downgrades (playing catch-up with the share price) or whether they'll remain super-bullish?

Source: https://fnarena.com/index.php/analysis-data/consensus-forecasts/stock-analysis/?code=PME

All of those target prices are over $200/share, ranging from $220 up to $300/share, and those are all from those various brokers' updates on Friday 13th, the day after PME reported, or yesterday (17th) in the case of Ord Minnett, so these are all up to date, as of right now, recommendations from those brokers. The lowest TP (from OM) is 80% higher than today's close (of $123/share) - that's wild!

Doesn't look like those analysts are worried about high PE ratios.

@Bear77 I added more PME IRL today. I’ll continue adding very slowly on continued weakness until it hits $82, then it will be time to back up the truck. ;) I have PME returning about 8% (ROI) on the current share price and FY27 analyst earnings consensus of $1.90 per share.

If it hits $82 @Rick I'll have a totally new strategy myself - and it will also involve a truck and reverse gear.

Of course as soon as I say that I wonder what would be the catalyst to drive them down that low and would that make any difference to the investment thesis... ?

Guess we have to just play it as we see it at the time.

@Bear77 in assessing value of SaaS companies, I am pretty much ignoring analysts.

Why? Well, its an ego and anchoring thing.

These people are supposedly smart, right? They are employed by institutions and (often) paid big sums. They have a track record of analysing markets, industries, and peer group valuations, and then issuing their research with investment recommendations for clients. They are skewered by the questions recorded for all to hear that they ask of the CEOs and CFOs on the investor calls. As well as the questions they didn't ask! Because of this, they often don't (and I'd argue can't) react quickly when the world changes. If they were so smart, and free to write what they really thought, they would have started reacting earlier, wouldn't they?

So, I think one of several things happens.

Case 1: SaaSaggedon is Real: SaaS firms will slowly (over years?) start losing real value - i.e growth rates will decline. That will unfold slowly and the analysts will start downgrading. They'll do it at different speeds, but overall will act like a herd. $PME's "miss" last week was a minor technicality and - on its own doesn't warrant the downgrade in the chart shown below. (Well maybe not entirely true, because as I've always said here, they were JUST PLAIN DUMB to have the consensus at over $300!)

Case 2: The SaaSpire Fights Back, in which case SP will recover to some new normal (albeit lower P/Es - probably a given), and magically over a year or so, the TP will trend back to the "new normal."

Nothing the analysts write can help me here.

I don't think the analysts have a clue about what will really happen. Of course they'll start to come in line with the SP momentum, as you can see in the shifting TP consensus in the chart below.

In times like this, I think analysts are next to useless,... if ever they were usefull ... and thats because the thing everyone fears isn't hitting company performance or guidance yet. (We might be able to Feel the Force,... but we can't yet see its manifestation.)

I for one am relying on my own conviction, research and valuations.

But each to their own. Everyone is free to do whatever helps them sleep well at night.

I agree with most of that @mikebrisy - probably all of it, certainly that they are almost always behind the curve and playing catch-up, which is why I questioned whether they would leave their target prices up as high as they are when the actual share price is over $100/share lower in most cases.

So I don't follow them but I do occasionally look at what analysts are saying and especially their target prices because I know that a few of them have a following and that they can move share prices with upgrades and downgrades. There is always going to be a small percentage who follow their chosen broker's recommendations rather than think independently and therefore if the analysts do what they usually do and follow the share price down, just like they follow the share price up when it's ahead of them, then there will be people who will sell, even if the new lower price target from the broker is still higher than the current SP. I guess it's more if they change their calls from Buy / Overweight / Outperform, etc. to "Neutral" or "Sell". I think that's actually unlikely with PME, but revised target prices are certainly on the cards.

So, no, I'm not following them, but I understand that some people do, so I do have a look occasionally for that reason. What other market participants do does matter in that it does impact share prices. It depends on your timeframe of course. I'm looking for an entry point so I'm more concerned with shorter term price movements. If I was already holding a decent position (set) I wouldn't be too bothered with whatever the price does in the short term as long as the medium to long term still looks rosy.

So, yeah, I had a look at where the major brokers are pitching their target prices for PME after their report on the 12th, and I found it interesting that they were all so high, even Ord Minnett's which was updated yesterday. Thought others might be interested also. I didn't include the FNArena broker overview screenshot as any sort of guide, just as a matter of interest.

@Bear77 the catalyst to driving the share price even lower is even lower share prices. It doesn’t have to make sense fundamentally. Sentiment for PME is poor, the chart looks ugly and I think most technical analysts would be calling PME a strong sell today. Thats what they do and people listen and take their advice.

This self perpetuating downward spiral starts to bring doubt amongst the fundamentalists also, and only the brave will buy as the price continues to fall. No one wants to buy shares today if they think they will be even cheaper tomorrow, and that’s what the chart is telling us will happen.

The downward momentum could continue for much longer than we could ever imagine, the same way the PME shares kept soaring to ridiculously high valuations on the way up to the top!

If PME kept falling to $82 the sentiment would be a lot worse than it is now. Stories would start to emerge about the future demise of the business and there would be very few investors backing up the truck. Most will be waiting for the share price to fall to $60 to start buying!

I hope I’m very wrong about this scenario, but I’ve seen stranger things happen before and I don’t underestimate the power of sentiment on share prices in either direction.

My true north is always based on valuation, but you can’t ignore the sentiment either. So while I think PME is reasonable value now and I’m buying slowly, I’m also expecting there could be more pain to come, and a slow recovery ahead of us.

That's very well articulated @Rick - can't (and don't want to) argue with any of it. I especially agree wholeheartedly with your line:

"This self perpetuating downward spiral starts to bring doubt amongst the fundamentalists also, and only the brave will buy as the price continues to fall. No one wants to buy shares today if they think they will be even cheaper tomorrow, and that’s what the chart is telling us will happen."

That was my view up until yesterday and then the one day chart looked so bullish yesterday that I went against my original plan to wait for a clear multi-day share price rise and bought a small starter position. Realised I was wrong today and promptly sold that small position at a minor loss. Lesson learned. One good day doesn't break a downtrend.

@Bear77 I also follow them and try to read some reports for each of my holdings, because it helps me to understand the issues and where to direct my efforts. They sometimes also do pretty good primary research of the company, products, industry or markets.

I also like to see how they react to changes in company performance and guidance, and understanding consensus often helps me understand how the market reacts in the short term to results.

My main point was that I never base my decisions on a broker TP or recommendation.

I often invest in thinly covered biotechs/medtechs. Here, the brokers often have a clear bias to a bullish view, or perhaps they stand to gain from involvement in capital raisings, or were involved in a prior raising and so have a vested interest. So it is not unusual to see TPs at +100% or more to the current price. It is important to understand that these are often just a bull case,

I know a lot of retail investors do follow the recommendations of their brokers. I have several acquaintances who invest, and they pretty much go solely on their broker advice. And they mostly seem happy to do that, so I am not criticising them in any way.

But for me, that is outsourcing the work I enjoy the most!

All good @mikebrisy - I think we're both on the same page with regard to broker calls and TPs. Interesting sometimes, but not to be relied on.

I am also aware that there are often conflicts of interest especially at the smaller end where brokers are sometimes positioning themselves for the next CR.

Or they have put their clients into these companies during previous raisings that they were part of, so can't easily flip the script and say that the company they recommended at $x is now worth less than half of that. Basically they are often compromised in terms of being impartial and arms length from the companies they are reporting on.

PME is a little different because they don't do CRs because they don't need to - with all of that cash and being so profitable, but those basic points about broker notes to their clients remains true.

So, yeah, same page. I just thought it was interesting that after reading PME's report and seeing the market reaction on Thursday and then Friday morning's further sell-down, those brokers still maintained TPs of $220/share up to $300/share - and it suggests to me that those TPs may get revised down over time, simply because that's what these brokers tend to do, follow the share price.

@Bear77 I agree.

One thing I often hear the "Talking Heads" say is, "don't buy on a downgrade cycle, wait for the first upgrade".

If you were to apply that "wisdom" to $PME, you'd definfely not be buying now, as there could not be a clearer "downgrade cycle".

But for the record, this is not "wisdom" that I apply to myself. And also for the record, I have been buying $PME, given by recent valuation.

So, for $PME what could catalyse an "upgrade"? I guess its a solid "beat" on the FY? Or another big, fat, juicy 10-year Trinity-like contract? (DoD maybe?)

@Bear77 and @mikebrisy , this is probably a pretty cynical approach to 'analysts' , but I would think that if you've been spruiking a stock, odds are you are also in it quite heavily, personally and / or in the fund or similar that you work for. Not in your best interest to change your tune and start saying that all the previous advice you gave was way off the mark from a credibility perspective with a big price downgrade, and financially you want to be reassuring everyone that this is a buying opportunity with a high price target to protect your bottom line and hopefully encourage a price recovery rather than sending more people running for the exits.

@jcmleng I'd be interested in seeing one of your famous charts on PME.

@tomsmithidg absolutely, ... those were the thoughts I bundled up in the word "ego".

Whether its politicians, CEOs, or even analysts (I guess), ... people often find it hard to admit when they are wrong. I believe, many people might be surprised if they were to learn the effort that goes on in big companies to make sure that what the CEO/CFO say avoids to the maximum extent possible/legal (and beyond what many might consider reasonable!) any inconsistency or contradiction what has been said in the past.

Discl: Not Held, Unlikely to Open Position

@tomsmithidg, apologies mate ... wasn't wanting to flood the thread with overly frequent chart updates, but do ask and thou shalt get! Friendly reminder also that this is just for share price watching entertainment purposes only ...!

The chart is simply showing the still-poor sentiment with AI-mageddon on the price, with no apparent buying in droves.

Looks like $111.75 is the bottom thus far - it hasn't been tested again but doesn't mean it won't get tested either.

The bounce up in the past few days hasn't been terribly convincing in terms of (1) price move, no long candles, one day up, next day down (2) the volume on both up and down days looks the same-ish (note that Trading View only shows ASX volumes, not CBOE, so have to account for that) - you want that to be high volumes typically (3) the current move up is more or less following the same price action of the last 4 dead cat bounces prior to this dip (green lines).

Drew another support/resistance area at $129.19 in green - that was where some consolidation occurred back in Jun-Aug 2024, which helps explain why it stopped at this level on its way down, then is stopping coincidentally at almost this same level on the way up and seems to get stopped there these past 3 days.

Given the action in Jun-Aug 2024, and if history repeats, it would not surprise me if PME bounces around between $111.79 and $144.27 - this is the broad purgatory zone essentially, shaded in yellow.

A breakout on either end will likely means it exits purgatory and either goes to SAAS hell or through the gates of SAAS heaven .... I'm not putting my money on which is happening, just watching the show from the sidelines. The first thing to watch out for is whether this is just dead cat bounce no 5 - need another 5-7 days of price action to get a better sense.

@jcmleng and @tomsmithidg this is global (unless and until there is a company-specific catalyst) - so I guess it just depends on what happens next in Europe and US. At some point (who knows when) there will come a level at which point the market says - "for the time being at least, the sector is oversold" - as I'm pretty sure its not going to zero as long as its generating all that free cash flow!