Pump's daily trading recs, emphasis on short selling Message Board

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Strategies & Market Trends : Pump's daily trading recs, emphasis on short selling

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To: Michail Shadkin who wrote (4931)	7/31/2001 12:38:24 PM
From: Michail Shadkin	of 6873

CPTL is on day 2 of a major pump. Here are my thoughts and research. Post by Craig74 Post Date: 2001-07-30 21:24:06 "CTC Communications Group is a full-service Integrated Communications Provider (ICP) delivering converged voice, data, Internet and video solutions to medium and large business customers." Earnings released on July 26. Lost $1.21/share. Supposed to lose $4.39/share next year (2002). Mkt cap relatively small (149 million), but: Long term debt: $186 million. (SEE BELOW ALSO) Preferred stock: $212 million. Basically that means: if things go south, common stockholders are in big trouble. Company has stated they are "fully funded," but then lays out many things which must also happen for this this plan to work. Cash: only $30 million. This is the kicker. And I might be wrong on this. It would be nice if someone can double check over my analysis on this. Okay, here goes: Company released earnings on July 26th and all cash/debt amounts are from June 30 only. Buried in the PR from the 26th is the following: "Subsequent to June 30th, the Company drew-down the remaining $100 million of the bank facility which will be primarily used for working capital requirements as needed. The Company does not anticipate any need for additional capital to achieve profitability within its current business plan." So, the debt numbers I wrote above are wrong. Long term debt has increased by $100 million. This is a massive amount of debt. Company also states: "The Company's capital structure does not include any high yield debt or extraordinary financing arrangements. The Company's capital structure results in an average cost of debt of less than 12%." When is 12% NOT high yield????? Capital expenditures are still very high: "Capital expenditures for the remaining two quarters of 2001 should continue at the current pace of $53 million for the first six months, thus allowing the Company to remain within its estimates of $110-120 million for the Calendar Year...." ====== My outlook: Company had better execute flawlessly or the common stock is going under. I personally love to short pumps on day 3. This company has major problems going forward, but enough cash to survive the next few quarters. The only problem I see with a short in here is the large short interest (18% of float, 1.47 million shares) which is probably contributing to the recent run. If anyone starts this as short, please use strict allocation rules. I'll decided in the morning. Comments appreciated. Craig

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