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Biotech / Medical : GZSP, Genzyme Surgical Products
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To: David Howe who wrote (7)7/6/1999 2:22:00 PM
From: rkrw  Read Replies (1) of 55
 
The drop in price of GZSP imo is due to the following:
1. Institutional selling. Many, many institutions have no choice but to sell. Either they aren't permitted by charter to hold such low market valuation stocks, or they aren't permitted to hold money losing companies and so on and so forth. They have to sell, price be damned.
2. Individual selling. After seeing the previous Genz spinoffs tank, they learned from the past, sell as soon as possible, take the gift and invest elsewhere. After the performance of gzmo 6 months back and the rest, how can anyone blame them?
So just tremendous built in selling pressure out of the gate with little demand to counter it.
This is an embarrassment for Genzyme and Termeer. Termeer's reputation among institutions is already bad, this will only serve to worsen it. I do agree with Rick's conclusion that gzsp will serve as an acquisition vehicle for complimentary companies and technologies, so its important to genz for gzsp to trade closer to fair value.
For reference, gzmo bottomed within a few weeks of its spin at $2 a share. It rebounded roughly 150% within 4 weeks thereafter. I'm looking for a similar pattern to follow for gzsp, although I expect a bottom to be somewhat higher than gzmo's given the $10 a share in cash.
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