Winstar Comm. (WCII) Message Board

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Technology Stocks : Winstar Comm. (WCII)

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To: Alfredo Nova who wrote (12043)	9/5/2000 12:40:18 AM
From: Bernard Levy	Read Replies (3) of 12468

Hi Alfredo: I have been in CLECs for a long time. IMHO, the only ones worth looking at are NXLK, WCII and MCLD (perhaps also ALGX). They have great potential (like TCI in the early days of cable or MCI and FON in the early days of long distance competition). Because these businesses are very capital dependent (you need to lay out the network before reaping the rewards) they tend to be very susceptible to junk bond rates and to stock market sentiment. Thus, I would never recommend putting all of one's money in CLECs. In fact, my recommendation would be to establish a small ``high risk'' stake in the better CLECs as a long term buy and hold position, and to have a trading position intended to capture the huge fluctuations in those stocks. I have been accused of being overly pessimistic, but IMHO, we are not nearly close to a bottom on the CLECs. We had already GST go out of business. ESPI and ICGX are likely to come next. About $40B in telecom paper will hit the market in the September-October time frame to finance 3G rollouts in Europe. This should sponge off all the demand for telecom bonds. The CLECs will probably get the last crumbs from the table. Unlike the earlier bottoms of October 98 and May 97 which occured in the backdrop of an accommodating bond market (in October 98 the Fed had just cut rates) I am expecting a much slower and grinding CLEC bear market culminating finally in a reversal (December 2000? Spring 2001?). The CLECs that will be left standing will be huge winners. Best regards, Bernard Levy PS: Most of the long term holders of WCII feel seriously burnt right now. Steve Bowen who got me interested in this company dropped out 18 months ago. I don't know what happened to Ali Calzada and Ric Dunaven. Now, SW is weakening. Only Paul Ferguson, Dub and limtex seem to be holding the fort. If WCII is successful, the great irony is that many of the early investors will be gone. What I am trying to say is that holding WCII requires a phenomenal immunity to pain.

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