Mr. Pink's Picks: selected event-driven value investments Message Board

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Strategies & Market Trends : Mr. Pink's Picks: selected event-driven value investments

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To: TRIIBoy who wrote (11759)	10/31/1999 12:55:00 AM
From: Walk Softly	Read Replies (1) of 18998

"TRIIBoy reiterates his Run For the Hills the Cattle Are Dying on BFT. Companies latest quarterly report shows a balance sheet on the verge of bursting." What thinks you on the $50mil+ positive swing in cash flow? (+$90mil last two quarters).... or the 38.4mil EBITDA (72mil last 2 qs)..... BFT turned a major corner in their performance 4 qs ago.... but 3Q99 has got to be considered the most impressive to date and well ahead of plan....... stock price has taken a well deserved rest.... Your receivables argument is flawed.... if the increase were spread to one large customer (with a single big future order) you might have a point.... however, when an increase in receivables is spread over 10s of 1,000s of small current individual contracts the "stuffing the channel" argument breaks down.... some contracts may fail, however (if you had only read and understood the balance sheet) BFT's reported receivables is net of an allowance for "doubtful receivables".... BFT is extremely conservative here having been around the block a few times.... they aren't exactly unaware of the failure rate of their customers.... Hey you might be right... this company may fail, shares may continue to fall.... but, just not for the reasons you stated.... there are business risks explicitly noted in their eps report (if you had only read it).... debt risk might be considered high if this thing weren't the biggest fattest subscription revenue based cash cow in the known universe (next to a utility , of course)......... and interest rates have topped (check DJU index double bottom)..... However, reiterating a short after a 30+% retracement to long term base support (14 month) at 24 is extremely foolish (if not wishful thinking, general market conditions having just re-esablished a mega upturn)..... especially with your rookie rendering of BFT's balance sheet... what do you make of all the 10K block buys on Friday??? Analysis of the rate of change of the exponentially smoothed average price suggests the completion of a downtrend. The rate of change is bottoming out and shows signs of increasing. In this market this is a bullish indication that a reversal may occur soon. The closing equity price has reached a 21 day low which is not confirmed by an equivalent low in On Balance Volume. This is a bullish reversal that indicates prices could turn shortly and start an upward movement. The closing equity price has reached a 21 day low accompanied by a positive Volume Accumulation Percentage. This is a bullish non-confirmation which often indicates a price reversal to the upside. The accumulation indicates that at these prices demand exists which could cause a price increase. We could experience a flash reversal at this point..... if I were short you can bet I'd have a straddle working in the options market as a mitigating hedge.... ES PS please don't offer any analysis in your rebuttal.... your Chicken Little rendering of the "sky is falling" routine makes for entertaining reading....

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