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Strategies & Market Trends : Gorilla and King Portfolio Candidates
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To: Uncle Frank who started this subject4/9/2001 2:54:12 AM
From: FaultLine   of 54805
 
With several of our favorites in or within shouting distance of single digit prices, this ominous report in Sunday's NY Times by Thomas W. Watts, a specialist at Merrill Lynch, states that only about 3% of companies sinking into the single digits ever come back.

"He found that of those companies whose stocks had fallen to single digits, only 3.4 percent rebounded to $15 or higher within the next year. Most of those that didn't bounce back in the first year never did."

"...But the rebound that many of these investors are expecting will probably never come. As Mr. Watts pointed out, there are several reasons for this.

First, many professional money managers, like those in charge of mutual fund portfolios, are barred by their firms' bylaws from buying stocks under $10. That keeps a powerful group of buyers out of these shares.

And for many companies with low-priced stocks, the mere fact that their market value is low makes it difficult to tap the stock market for money. That is because investment bankers find it much easier to raise money for a company whose stock has rocketed in the recent past.

But the sad fact is that many of these companies have so little cash on hand to run their businesses that if the markets are closed to them, they can very easily fail. "

Market Watch: In Stock Prices, What a Difference a Digit Makes
nytimes.com

--FL
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