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Technology Stocks : Broadcom (BRCM)
BRCM 54.670.0%Feb 9 4:00 PM EST
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To: uu who wrote (6291)8/17/2002 4:50:19 PM
From: Larry Livingston  Read Replies (1) of 6531
 
Addi,

I couldn't agree more with your fundamental analysis. BRCM is slowly burning it's cash. It has no profit and no likelyhood of profit. It's margins are deteriorating and insiders have no respect for the stock. They have been dumping all the way down. It's a pattern that has played out again and again and the stocks all hit low single digits.

My concern and maybe you can answer it is timing. What makes you think this will play out in the next six weeks?

If the market heads south next week then of course I agree. BRCM goes with it. Particularily as mutual fund redemptions accelerate it's collapse.

However, there is a different scenario. The market goes up over the next month. Index funds create a market for the stock regardless of it's fundamentals. Shorts bring in some of their shares. The game goes on a little bit longer.

Frankly I can't imagine why any sane manager or insider would not be selling into Friday's surge for all they're worth. It may have been their last opportunity to get out.

I've noticed a fairly high short interest in the stock, running just under 15%. Has it always been this high? If so then not too much to worry about as these shorts have good entries and will not cover till the mid single digits.
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