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Pastimes : Clown-Free Zone... sorry, no clowns allowed
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To: Earlie who wrote (86548)3/27/2001 7:51:01 PM
From: patron_anejo_por_favor  Read Replies (1) of 436258
 
Clowns in the corporate finance department? You bet!

quote.bloomberg.com

03/27 14:54
Optical Cable Pays After Stock Investments on
Margin (Correct)
By Miles Weiss

Optical Cable Pays After Stock Investments on Margin (Correct)

(Changes headline.)

Washington, March 27 (Bloomberg) -- Optical Cable Corp. may have set a
corporate financing first by obtaining a margin loan to bet as much as one-third of
the company's assets on technology stocks.

Beginning in late 1999, the Roanoke, Virginia, manufacturer used cash on hand,
funds generated by operations, and margin borrowings from an investment broker
to buy shares in a stock index fund concentrated in technology companies. A
year later, the manufacturer of fiber optic cable had $18 million of its $53 million
in assets invested in the index fund, according to a regulatory filing.

While the investment initially paid off, the index fund's performance soured late
last year when the Nasdaq Stock Market plunged. Now Optical is facing the
consequences of its unorthodox strategy. The company reported a net loss
during the first quarter ended Jan. 31 because trading losses of $3.99 million
outstripped the $3.95 million earned by selling fiber optic cable.
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