CNC BUY RECOMM. by teknalysis from RB Tek's World Web Site.
This is simply an excellent review, taking a new look at the
CNC Longs/shorts scenario.
An excellent contribution. Let us all warmly welcome our
new CNC long,
teknalysis,
TA
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ragingbull.altavista.com
To all Tek’s World members;
On 6/27 I bought CNC buy at $6 1/8.
It eventually ran to an intraday high of $11 3/4 on 7/5.
The recommendation was based on
Irwin Jacobs and associates buying over $100 million worth of
CNC common stock
--Jacobs said CNC represents the greatest profit
opportunity he has seen in his 58 years--
and the pending announcement of former GE Capital exec
Gary Wendt as the new CNC CEO.
Mr. Wendt has become the new CEO and has brought at least
6 GE Capital veterans with him as his A-Team.
I am now recommending CNC, one of the 10 largest
insurance companies again. It has based out in the low to mid $7’s, and closed at $7 3/8 on Friday.
The technical indicators have been bullishly reset.
Of special interest are
the Bollinger Bands, which are showing the tightest contraction since July 1996.
The issue creating the new buying opportunity in CNC is the
various nearing deadlines for various amounts of debt
repayment.
The dates and amounts are:
9/1 $155 mil: bank credit line
9/1 $144 mil: guaranteed loans to execs for CNC stock purchases
9/22 $766 mil: bank credit line
9/22 $ 50 mil: commercial paper
9/30 $250 mil: notes not due until 2003, but holders “can begin drawing on through 9/30/00”
CNC has assured shareholders that non-strategic assets
have been sold(credit card division sold to American Express for $350 mil) or
will be sold (among the non-strategic assets, CNC owns 29% of AGY, 21% of TTEL and a large interest in a NYC office building in association with Donald Trump)
sold to meet some of the debt repayment.
Until such assets are sold, CNC has assured shareholders that the looming debt payment deadlines will be extended and/or the debt refinanced. CNC is also in the process of selling Conseco Finance (formerly Green Tree Acceptance, a large manufactured housing financer).
Anti-CNC forces, such as Barron’s, CNBC, and various newspapers in MN and IN, etc have been painting a dismal picture for the above-mentioned restructuring. Short sellers have been working overtime on message boards to further frighten longs. Debt reporting agencies such as Moody’s, S&P, etc have lowered the company’s debt ratings. Major brokerages have lowered their outlook on the stock.
This is called “Bash & Stash”.
It is the opposite of “Pump & Dump”.
In the Bash & Stash, the goal is for the Street to bash
the target company and stash away the stock at low prices.
When the “problem situation” of the target company is resolved, the stock goes up and the Street makes a killing.
Because of the large number of insurance and mutual fund
policyholders, the general size of the company and its
relative importance in its industry, it is very unlikely
that the debt will not be restructured next week.
Also, the banks, brokerages and other creditors earn too
many millions per year in interest, consulting fees and
preferred dividends not too save the patient.
Here are the share data (in round number) numbers for CNC:
Issued 325,000,000 shares
Insiders 72,000,000 shares
Other large holders 145,000,000 shares
Float 108,000,000 shares
Short interest 66,000,000 shares
CNC has the 2ND HIGHEST short interest of any NYSE listed
stock (sandwiched between FON and AOL)!
To battle the shorts, Irwin Jacobs has spent $500,000 on
full-page ads in the WSJ and NY Times, as well as
appearing on CNBC on 8/25/00. (That was nice of CNBC,
considering their correspondent, Sheryl Strauss Einhorn has
joined the ranks of the bashers...).
The purpose of these ads is to educate the long
shareholders about the damage the shorts are doing and to
suggest a solution. The solution offered is to notify your
broker in writing not to let their shares be loaned out to
shorts. (I have been teaching this for many years whenever
I hear someone give the usual erroneous and ineffective advice of setting high limit sell orders).
Jacobs' unprecedented campaign on behalf of the company
(and his substantial equity in CNC) is helping start the
short squeeze that will erupt when the debt restructure
announcement is made.
Jacobs is in good company.
Other major shareholders are
Alex Brown, Barclays, Pimco, Harvard College,
Equinox Capital, State Street Corp, Federated Investors,
Thomas Lee Partners, National Fidelity Life, Pioneer II fund,
Federated American, Hartford Capital, Safeco, Vanguard,
Morgan Stanley Dean Witter, Aetna, Gabelli and
Morningstar.
For more details on CNC, read the CNC board at Raging Bull. Start with post number 4798 ragingbull.altavista.com
and it’s various links.
Also read all other posts by ta_56,
Message 14273505
as well as greeedyboy,
and paulthebigfinn.
Message 14282620
I recommend CNC as a strong buy. |
