Trader J's Inner Circle Message Board

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Strategies & Market Trends : Trader J's Inner Circle

NVDA 176.10

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3:59 PM EST

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To: Tony B who wrote (5335)	1/21/1999 12:04:00 AM
From: kha vu	of 56535

Tony B: ASCT buyout scenario. I had the experience with SMTG/BAX and T/TCOMA: 1) SMTG a company that was bought by BAXTER. Six months before that one insider on the BOARD bought about $600 k worth of SMTG. This fellow is also serving as board member of at three other reputable companies. The news lifted the stock price %25 and the volume surged. SMTG was also selected by Individual Investor and one newsletter by McCamant. SMTG also got lot of publicity on NYT and WSJ because of the interviews of McCamant on these magazines. The product line of SMTG was also in the III phase of clinical trial. Then SMTG was in cash crunch!!!!!!It has to be sold to BAX for about $5 and changes whereas a couple months before you can sell it on the market for $9. BAX offered $5 per share so that SMTG can be converted to BAX shares. During this period of six months, shareholder can request the broker to tender your shares to BAX or to sell it on the market then BAX eventually will buy it on the market. When you ask your broker to tender your share to BAX, you have to wait until the six month period is expired. Again you do not touch this money until the period is expired. Again, BAX can extend this period if they can NOT get all the shares tendered...since some mutual funds might hold on in order to get either a better price... During this period you can also ask you broker to give you back your shares so that you can sell it on the market if this period is extended. Since the SMTG was thinly traded at that time so i tendered them to BAX and got them converted to BAX. Also BAX gave the tendered shareholder one option: if in 1999 if the former SMTG have the product approved by FDA, we will get some cash for holding these shares until that date..... 2) TCOMA was acquired by T (AT&T). At the announcement the share of TCOMA went from 20 to mid 40. There a formula for the conversion of TCOMA to T shares...but in the end TCOMA share did went up because of this acquisition. The acquisition has to be approved by FCC and again by shareholder the coming month in 1999. Have you check out the share price of TCOMA lately: to day close at 68 1/2 and T at 91. This is because TCOMA share price is determined by T share price. In this case i do NOT mind the period of more than nine months that requires FCC approval and luckily that T making good earnings !!!! The reason that I did NOT sell my share at the time that it went up to 40 because it was still a little below the converted price determined by the conversion formulas. The difference between the market price and the high formula price made me as well as other mutual fund holder wait for FCC approval....and for the conversion to T share. This wait is well rewarded. SO you see here two different scenarios.

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