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Strategies & Market Trends : The 56 Point TA; Charts With an Attitude
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To: Instock who wrote (6966)11/3/1997 11:25:00 AM
From: Doug R   of 79356
 
RLLY, re a conversation w/ Mike Vitas. (We were wondering about all that CHKR stock)

Hi Doug,

The RLLY situation looks like a reworked effort at merging CHKR and
RLLY. THese two companies were negotiating a merger earlier this year
that failed as a result of not being able to obtain favorable accounting
status. RLLY was to be merged into CHKR.

Since the officers at CKE,GIANT,CHKR,RLLY and FNF appear to be the same
and both RLLY and CHKR have lost significant market value and have had
negative earnings, a merger seemed to make the most sense to take
advantage of cost savings in administration, management and
distribution. The recent RLLY/CHKR financial transaction looks like a
step in that direction which may eventually lead to the actual merger.

I have reviewed the financial condition of RLLY for the last few years.
Sales have been declining but they have been cutting expenses to match.
The most recent quarter showed big expense saving and even an operating
profit before other expenses. RLLY on its own looks solid. The
acquisition of 24% of CHKR is bothersome (but can certainly change
quickly) to me because CHKR stock has been a dog for some time. CHKR
may have stopped the bleeding in their operation but their stock price
does not show investor confidence. RLLY has already lost some
shareholder equity because the deal took place at $1.33 for CHKR and it
is now bid at $1.12. If the two companies can successfully combine
certain business activities, both will benefit and RLLY will doubly
benefit when investors return to CHKR stock.

It is an interesting situation. The two would be great together but
both are weak financially and neither can take over the other.

Short note.

23- 25 institutions in RLLY and CHKR.
Net buying in RLLY, Net selling in CHKR.

Mike
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