Auric Goldfinger's Short List Message Board

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Non-Tech : Auric Goldfinger's Short List

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To: Dante Sinferno who wrote (8768)	12/20/2001 3:22:13 PM
From: Sir Auric Goldfinger	Read Replies (1) of 19428

ASW Just a hair late as ever: J.P. MORGAN SECURITIES INC. - EQUITY RESEARCH ACLN (LONG-TERM BUY) We Think Uncertainty Warrants Downgrade To Long Term Buy From Buy Earnings Per Share P/E ASW 52-Wk ----------------------- -------- MkCap 12/20 Rge 12/00 12/01 12/02 4Q/00A 4Q/01E 12/01E 12/02E Yld ($MM) ---- ----- ----- ----- ----- ----- ----- ------ ------ --- ----- $16.55* $50-18 $2.93A $5.10E $7.20E $0.74A $1.32E 3.3x 2.3x NM $241 *Intraday price We are lowering rating from BUY to Long-Term Buy due to growing concerns. Several recent news columns have surfaced criticizing ACLN's operations. We have reviewed some of the criticisms and believe they may be unfounded. However, these allegations have created uncertainty that has been compounded by ACLN's actions. Specifically, we have been unable to speak with the company's bank BNP Paribas regarding its cash balances and the company has declined to aggressively buy in its stock, despite $117 million of cash and a 1 million share authorized buyback program. We are reassessing the risk surrounding ACLN and we are lowering to our rating from BUY to LT Buy and lowering our 12-month price target from $70 to $45 until we get better visibility into ACLN's operations. Stock down on laundry list of concerns. Several news groups have raised concerns over ACLN's operations in the past week driving the stock down over 50%. Concerns have been raised about the company's filings, share ownership, ownership of the Sea Atef and the company's domicile in Cyprus. We have investigated some but not all of these published concerns. Our analysis indicates that ACLN owns the Sea Atef via power of attorney and possession of the title of the boat and that the registration of the Sea Ate to offshore companies is a standard industry practice In the shipping industry. Our analysis suggests some concerns are misplaced. Our research efforts suggest that some of the claims such that ACLN does not really own the Sea Atef are not valid. The Sea Atef ownership structure is setup through subsidiaries to minimize ACLN's risk (with $117 million in cash) to the potential liability of a $6 million vessel. We recognize ACLN's untraditional management, corporate structure, Cyprus base, and operations create concerns; however our analysis has not yielded any credence to the speculation surrounding these peculiarities. Inability to verify cash balances creates concern. As part of our analysis, we have been investigating ACLN's cash balances reported at $117 million at the end of 3Q01. We have viewed official bank statements from ACLN's bank, BNP Paribas indicating these amounts; however we were unable to verify this amount due to bank secrecy laws in Luxemburg. The company has been unable to obtain authorization for us to discuss the account with their bank. Our inability to confirm cash balances at ACLN and the fact that the company has failed to buyback its shares at depressed levels is the primary reason we have lowered our investment rating which reflects the increased risk in the story. It has become difficult to assess the risk in the ACLN story. We now view potential upside to the stock as dependent upon the company's management taking action to address the market's concerns. We believe it is impossible to quantify the risk to our earnings estimates and the story at this point in time. We rate the stock a Long-Term Buy with a high degree of risk. First Call Corporation, a Thomson Financial company. All rights reserved. 888.558.2500 ] EON

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