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Strategies & Market Trends : Value Investing

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To: Paul Senior who wrote (9252)	12/10/1999 9:37:00 AM
From: Terrapin	Read Replies (1) of 78595

Hi Paul, Bob, Armin, I am back to say something dumb about Tyco again. I have not sold and admit to be very surprised at that market reaction to what would otherwise merit concern. The initial Tice report was NOT strongly worded and did NOT expose anything that had not been discussed before. The reaction to that report, well, it is one for the books. My first reaction...where there's smoke? It is now known that Tice and/or his fund had short positions in Tyco established before he published. In his response to the report Tyco CEO was unequivocal. He also stated that he was inviting the SEC to investigate the circumstance surrounding the reports release given the extreme reaction. The SEC has stated that this is an informal inquiry (which of course may lead to a formal investigation) into Tyco's accounting for acquisitions but also into Tice's trading practices regarding Tyco. Given the reaction to the report I think the SEC is right to look into it. Tyco is going to release their 10K soon which will be signed off by three accounting firms. There is more discussion on the Tyco thread which I had the pleasure of starting several years ago (So much for credibility). Honestly, I don't know what to tell you. Does market action define the truth in situations like these? Thus far I have not been convinced that there was extreme wrongdoing. If there was then why didn't the author of the Tice report find it? Why didn't the top tier accounting firms find it? Will the SEC feel compelled to turn up something, anything, even if it is not illegal to justify the inquiry? I have heard that given the complexities and subjectivity of accounting practices that they could find something and if so then the market reaction is likely to be near-lethal. Because I have been holding for years I still hold a profit in Tyco and believe that I am young enough to risk holding a bit longer. However, I am not adding more because that would push me beyond my already frayed risk tolerance. Terrapin

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