This is John Westergaard of Westergaard Online Systems www.westergaard.com following up as promised in post number 86 of the Pluvia vs. Westergaard thread. There are several points:
1. I respect the widespread concern expressed in postings here and in the many email communications received that the true identity of Pluvia be protected. We will not reveal Pluvia's real identity or place of residence in the event we are successful in obtaining them. We do however reserve the right to publish information about the fictitious character Pluvia if we believe it is relevant to the point at hand. For anyone to argue that by doing so we might be violating someone's right of privacy -- the right of privacy of a nom de plume -- is a pure oxymoron.
2. As to what might be of relevant interest in a Pluvia dossier, it would most likely be information showing Pluvia to have a vested interest in driving down the price of Premier Laser Systems (PLSIA) common stock or in advancing the interests of a competitor, in this event most likely a company by the name of Ion Laser Technologies (ILT) which manufactures and markets a competitive laser based tooth brightener. Investors asked to consider Pluvia's analysis and opinions about PLSIA have a right to know of any vested interests that might fuel his agenda.
3. Pluvia's analysis of PLSIA does not involve the purveyance of fraudulent information. He is clearly an informed party. I would contend, however, that its presentation is twisted in a manner to create an unbalanced negative view of the company and its CEO, Dr. Collette Cozean.
4. The problem with persons such as Pluvia who disseminate narrowly focused misinformation of what I call the "Abelson genre" is that they cause investors to lose sight of the big picture which in this case is, "Does this painless laser dental drill function as claimed?" On this point, it seems to me that one has to go along with the FDA and assume the product is efficacious.
5. If it does, then the product should gain widespread acceptance in the dental community much as the high-speed drill did in the 1960s. In my hometown, once the first high-speed drill was introduced, it took no more than 18 months for every dentist in town to buy one. Their patients insisted upon it.
6. Not to change the subject, but let me note that I pride myself in focusing on core elements of a given matter. Yesterday morning I watched the McLaughlin show on the subject of the graying of America. He asked the panelists whether the aging of the population was a good thing for America, a bad thing or simply neutral. Each of the first three respondents answered in terms of the economic issues such as the viability of the Social Security System or the opportunities for making money by building golf course communities, etc., that kind of thing.
7. I was disgusted until the fourth panelist, a Marc Miller from U.S. News & World Report, stated the true issue: "Of course it's a good that people are living longer, healthier, more fulfilling lives."
8. Can anyone dispute the wonder of age 70 today being the equivalent of 60 a generation ago? Isn't that what's important. In the same manner, if PLSIA's system really does remove hard tissue painlessly, isn't that wonderful and does anyone disagree that absence of pain is a material human value?
9. When America Online (AOL) was trading at 25 last fall and the short sellers were predicting it to go to t 12, I published an analysis which argued that if the average member of AOL was spending 15.4 hours a month on the system as reported and one placed a value of $10 per hour on that time, it meant that the average customer was spending not just the $240 annually for access to the system but also another $1,800 annually of time equivalency. That suggested to me that the company had created a huge franchise with 8 million subscribers. Ergo, the stock was a buy, not a short sale, at 25.
10. The point being that people like Pluvia and Alan Abelson of Barron's are sometimes right in their analysis but more often are a source of dissonance causing investors to lose sight of the important issues.
11. As for Cozean, by the way, let me note that not many investment analysts have listened to more early development stage stories over the years than I. When she walked in the door 4 years ago, I found her story interesting because there was clearly a substantial technology platform that she had purchased from Pfizer on a management buyout. At the same time I was frankly somewhat put off by what seemed to be excessive overconfidence in her assumptions as to FDA approval for various products and her projected time frame as to when clearances would be forthcoming. I can now say that her confidence appears to have been well placed.
10. As to questions about our motives, please be assured that neither I nor anyone in our firm orassociated with persons in the firm or the firm itself own or have an interest in shares of PLSIA or in any aspect of its business. We are publishers of Westergaard Internet Broadcasting Network (WIBN), an Internet channel to be formally launched on September 4, 1997 at a luncheon at the Waldorf Astoria in New York City. It will lease member affiliate cyberstations to selected companies of which PLSIA will be one.
12. In accepting lease payments, WIBN will by definition have a fiduciary relationship with PLSIA. Services rendered to PLSIA will only be of value to the company, however, if WIBN maintains a reputation for independence and integrity of its research in a manner no different than a Morgan Stanley or Goldman Sachs and other investment banking firms have maintained their reputations for providing respected research on their investment banking clients with whom they have a fiduciary relationship. In the event there is unresolvable disagreement between a member affiliate and WIBN over material to be presented on a member affiliate site, the lease will be subject to a cancellation clause. For a preliminary view of what a WIBN Cyberstation will look like, GO TO www.wbn.com/IDX.
13. With regard to my own investment record and questions about my integrity that have been raised, what is important to know is that despite having functioned primarily in a very speculative microcap sector of the market for 40 years and having made my share of mistakes over that period, I have never been sued, been the subject of regulatory discipline, or to my knowledge had my integrity questioned. During the course of my work, I have been the first analyst to sponsor more than 20 investment ideas that have risen more than 20 times over.
14. I have also published studies, which have spotted long-term trends and problems well ahead of the market. My 30 page 1978 study "Small Is Beautiful" predicted the rise of the technology entrepreneur as the American folk hero of the 1980s and 90s. That was before anyone had ever heard of Steve Jobs or Bill Gates.
15. My 1984 study, "Silicon Valley in the Land of Milk and Honey" correctly predicted the rise of Israeli hi-tech as a world class industrial force and investment opportunity for Americans in the 90s. My study of the Texas banking industry in 1986 correctly predicted that the shares of the largest bank in the state, Republic of Dallas, then 29, would be worthless within 18 months which proved precisely on target.
16. My latest controversial prediction is that the Federal Aviation Administration will not have the U.S. air traffic control system fully functional by year 2000 due to its failure to address the Y2K date conversion problem in a timely manner (it remains still in an "awareness stage") and Federal Express will therefore not be able to fly at night for several months if not longer into year 2000 and therefore need to seek Chapter 11 court protection.
BOTTOM LINE: Keep your eye on the ball fellow SI members (yes, I'm joining). Don't allow anonymous small timers such as Pluvia distract you from the basic consideration: "Is there a franchise here?" That's the Warren Buffett philosophy. "Where's the beef?" Pluvia speaks from the perspective of a trader; we speak from the perspective of investors.
Avoid at all costs being sucked into a vortex of minutia. Look for big ideas, honest management, have patience, cut when they don't develop, go on to the next. At some point you'll come across that 20 bagger. Stick with it when you do. "When you find her, never let her go."
Double up as you gain confidence. That's the way serious money is made in the stock market.
This whole Pluvia brouhaha reminds me of U.S. Surgical in the mid 1970s when it could not find a key to getting surgeons to train on its surgical stapler product. The stock was 3. They finally sorted that out and the stock proceeded to an eventual pre split-adjusted high of $1600. $10,000 invested when I first came upon U.S. Surgical would have been worth $5.3 million at its peak.
Is PLSIA another 533x bagger? Probably not, but I do believe it is a potential 5x to 20x bagger and that's not exactly chopped liver.
Please address questions to john@westergaard.com |
