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Technology Stocks : Healtheon Corporation (HLTH)
HLTH 0.1200.0%Sep 10 5:00 PM EST
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To: $Mogul who wrote (251)8/10/1999 12:01:00 PM
From: ISP_Investor  Read Replies (1) of 861
 
FYI- I didn't think everyone would sell this morning at the open. The large blocks trading this morning (one 48k block should have been split up and distributed but someone just sole the whole chunk at once) mean that the smart money is out the door at these valuations. If you'll notice the institutional ownership at the next reporting date, you'll see that the individual investors have been left holding the bag here. It's 8% now and may be sub 8% at next reporting date.

Factors to consider:

1) If this many investors sold on the lockup expiration this week, then what happens when the WebMD shares are unlocked (10s of millions) This stock has dropped every week for the last two months. There will be a lot of add'l investors who are unlocked today who will take chips off the table. Anyone who thinks the prices are low now, should wait until next week.

2) There will likely be margin calls on individuals long the stock who are on margin and they will have to sell double the amount of stock to cover or come up with cash.

3) Because the stock drops every week, institutions who invested in the private market will panic and pull all their chips off the table at first chance.

4) Window dressing at end of quarter will mean add'l institutions will dust hlth under the rug.

5) The WebMD and MEDE transactions are at lower valuations right now because of the decrease in stock price. If these have to be renegotiated, this will result in add'l dilution for investors and transaction risk. -This kills the valuation for those deals (or increases dilution considerably). Collar for MEDE deal has been violated so this becomes very complex as the add'l shares that will have to be issued for the MEDE transaction will decrease the overall valuation for the WebMd transaction and increases the shares required for the purchase thus eventually diluting any future eps. If WebMD has a collar?? that has been violated then the WebMD add'l shares will dilute the MEDE valuation. It will take attys from all companies to figure this out and negotiate something that works for all if there is such a solution.
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