Multiples times multiples equals fluff. ICGE's trading range will be in the 20's.
I still want to buy this stock, though not at current valuations. The value of the Red Herring article is that it is not a puff piece. Their article in Feb '98, Americen keiretsu was also provocative.
I am not trying to trash this stock. I sincerely hope to buy it in the high teens, when it settles down. And if not there, then in the low 20's. It is a long-term (3 to 5 year) investment, IMHO.
My biggest concern about ICGE is that VERT already has an "internet optimism premium" factored into its valuation, at a cap of $1.12 B. That is, VERTs net asset value has been multiplied because people have long-term optimism about the internet.
ICGE owns 37% of VERT to give ICGE $414 M towards it net asset value. When you start applying a multiple to ICGE's net asset value because you are optimistic about ICGE's future on the internet, you are multiplying something that has already been multiplied.
It starts getting really fluffy. I don't want to pay so much money for fluff.
Clearly ICGE is still in the phase where its price is propped up by the underwriters. Nothing wrong with that: they are doing their job. The stock had settled down into a range around $27 to $28 most of the day, and they tried to kick it up to close at a new high so they could sucker in more investors on Monday to buy at even higher new highs. Many people know this stocks trading range will be substantially below its early post-IPO high. The brokerages are trying to get that early post-IPO high to be waaaaayy up there, so people think the trading range also should be high.
But they tried to play this game on Friday afternoon while the market was crumbling all around them.
On my watch list, VERT is right below ICGE. I study the spread between the two stocks. It may increase more on Monday, and even Tuesday, but then it will stabilize and then decline.
JMHO, FWIW.
Tom D |
