MRV Communications (MRVC) opinions? Message Board

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : MRV Communications (MRVC) opinions?

MRVC 9.975

-0.1%

Aug 15 5:00 PM EST

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next

To: Hawaii60 who wrote (25443)	10/14/2000 7:07:12 PM
From: Duffeck	Read Replies (1) of 42804

Hawaii: Take a look at HWP/A example quote.yahoo.com quote.yahoo.com A IPO was on November 18, 1999. The distribution formula for HWP/A was .3814 shares of A for each share of HWP. So in this case the formula becomes. HWP= .3814A + HWP(EE) where EE means Everything Else. Now we can solve for HP(EE) using the values determined by the market at the close on November 18th 1999. HWP closed at 94.3125 and A at 44. Therefore: HWP(EE)= 94.3125 - .381444 = 77.53 Both A and HWP took off after the IPO. A peaked at 159 on March 6, 2000 an increase of 115 from the close on the day of the IPO. Lets see what we get for a value for HWP using our formula. HWP= .3814A + HWP(EE) In this example I will assume HWP(EE) remained constant at 77.53. HWP= .3814159 + 77.53 = 138 Now on that day HWP actually closed at 146. So between 18 November 1999 and 6 March 2000 our simple arbitrage model predicts that all but 8 the increase of HWP since the IPO day was driven by the increase of the spun off entity A. The additional 8 was attributable to an increase in HWP(EE) from 77.53 to 85.53. Now as we all know today 13Oct2000 the value of A has decreased to 44 and HWP(EE) is 90.625. The sum of both is 134.625. A year ago HWP including all of A was 83.25. The increase in one year is 61.2%. Now what is the point of all this? As we have seen the arbitrage formula worked fairly accurately predicting the increasing value of the mother company HWP based on the increasing value of the spun off entity A after the IPO date. It is impossible to forecast the value of HWP if the A IPO had not happened. However, as we have seen the value of the two companies today is 61% higher than a year ago. duff

Report TOU Violation

Share This Post

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next