TouchStone S/W (TSSW) Message Board

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Technology Stocks : TouchStone S/W (TSSW)

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To: David Alan Cook who wrote (3146)	3/13/2000 1:30:00 AM
From: robbie_nw	Read Replies (2) of 3627

David - You refer to TSSW's potential as being equal to 5x NAV based on an incubator business model...and cite ICGE as justification for this valuation. I must ask: Have you done any fundamental analysis of ICGE's valuation? Can you say with a straight face that ICGE is fairly valued? 5x NAV is ludicrous when the ONLY source of income is by trying to increase the NAV through reinvestment. AN incubator is nothing more than a glorified dotcom mutual fund. Should an investor be willing to pay 5x's as much(through the fund) for one of the individual stocks that a Janus fund buys...presumable because Janus fund managers are so astute that the holdings are worth 5x's as much as if they just bought the individual stocks on their own. Of course not...thats ludicrous. By saying that TSSW should sell @ 5x's net asset value as an incubator you are saying that just because TSSW has graced EBLD with its golden touch....TSSW's shares in EBLD should be worth $30 today...while the rest of the world's shares are worth $6. Are we forgetting that it is quite possible that the underlying holdings of an internet incubator are already fully valued...or perhaps even overvalued...since these underlying companies are dotcoms and are usually given the forward looking valuations that assume everything is going to grow exponentially indefinitely. IMHO...ICGE and CMGI are two of the greatest testimonies to a speculative market bubble. 1X NAV assumes that the stock in their underlying (and richly priced) internet companies stay aloft....what happens if reality sets in to this market. This is not to say that TSSW can't be tremendously succesful in their new strategy...but 5X NAV is truly a pipe dream for TSSW imho. If you want $30 a share for your TSSW stock....TSSW's gonna have to have $30 a share NAV imo. FWIW...Heres a link to a Barron's article earlier this year that discusses ICGE's valuation: Message 12508962 ICGE and CMGI surely are prime examples of the potential...but I for one do not expect that these cases of internet mania will be duplicated with TSSW. I would look for continued success from TSSW investments...and translate those investment successes to share value on a 1:1 basis...not 5:1.

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