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Non-Tech : Bill Wexler's Dog Pound
REFR 1.620+3.2%Dec 5 9:30 AM EST
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To: Bill Wexler who wrote (6232)1/20/2000 6:27:00 PM
From: DanZ   of 10293
 
Bill,

Thanks for your reasonable comments. I believe that Gum Tech will earn a profit in the fourth quarter 99 that will almost entirely eliminate their loss for the first three quarters of 99. One problem with your strategy of waiting to see earnings before covering your short is that the stock will probably move up in anticipation of the earnings, among other things. I disagree that the price of GUMM is moving up on speculation by scientific illiterates. IMO, it is moving up because investors believe that the company will have earnings this year and/or are speculating that positive clinical studies will be released soon. Other factors that could be driving the price are speculation about a dental gum contract with a company such as Proctor and Gamble or Colgate, finalization of the nicotine gum joint venture with Swedish Match, and international distribution of Zicam which should add significantly to revenue and profits this year. Additional analyst coverage may also be in the cards. I agree that the price would be doomed to collapse if the earnings that investors expect don't materialize. If I thought that this would be the case, I would be selling right now instead of holding. Based on my projections, I believe that Gum Tech will earn more than $2.00 per share this year. If I'm right, the stock will trade much higher than today's close of 23 1/4.

Good luck with your position.

Dan
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