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Technology Stocks : VALENCE TECHNOLOGY (VLNC)
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To: Rich Wolf who wrote (13374)7/24/1999 11:35:00 AM
From: Larry Brubaker  Read Replies (2) of 27311
 
<<Larry, with your intense desire to research SCUR...>

Rich, I find it worth my while to research other companies who have had floorless financing, particularly floorless financing from Castle Creek. It may provide some clues about how to play VLNC. I've learned 4 lessons from looking at SCUR's situation.

(1) Just because a stock has floorless financing doesn't mean it can't go up (SCUR went from $10 to $29 between the time the deal with Castle Creek was done and the time the floorless conversion window opened).

(2) Just because a stock with floorless financing goes up doesn't mean it won't, at some point, be vulnerable to a death spiral. (SCUR fell from $29 to $2 shortly after the floorless conversion window opened).

(3) SCUR's fall from $29 to $10 before their declining fundamentals became public reinforces a very important lesson I learned from our beloved Dr. Zeev. "When the technicals don't agree with the fundamentals, believe the technicals." We also saw an example of that principal at work with VLNC in the fall 1997 when production was supposedly on track for 1st quarter 98 but the stock fell from $10 to $5.

(4) The presence of celebrity board members says little about the fundamentals (or lack thereof) of a company.
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