All: A corrected take on TWT's upcoming moves and how it may play out.
I believe that the sizable reduction in outstanding shares was looked
on as providing massive support and allowing for acquisition activity.
The reverse split is prudent and in our collective interests, even if
many here must be down >25%, and trying to figure out buy/sell/holds.
Here is my view of what should play out after the reverse split:
Given = $150M+ for '97 10% Net of $15M or $3/share for '97.
= Spin-off in Q4 IB/Institutions begin coverage of TWTI.
= 5.M+ shares out. MMs begin an exodus away from TWTI.
= >1/2 held close. Institutional buying sucks up 10-20%.
Has anyone contemplated what happens when such a small float meets a
strong demand? You should really see some fireworks when TWTI gets to
$10, and institutional buying gets going. Trading halts and volatility
could be followed by significant daily up moves as too few shares are
chased by entities who have BIG money. I believe that TWTI is going to
issue some more shares to finance some acquisition(s), and just may
place more shares in our hands via 2-1 splitting. You may not agree
with this analysis, but does anyone really believe the owner group of
TWT is going to status quo a drop from 33M shares to 2.2M as it now is
equating to a drop in price from $20.70 ($1.38x15) to $9.375? It is
ludicrous to assume that the small supply of available shares will not
be augmented over time via splits of the :-) kind. I realize there are
many who will see TWTI going the way of ISGI is issuing shares, but it
will not happen as Booth/et.al are the major owners in control now. It
makes a lot of sense to take outstanding shares to a point where about
25M are available. This would provide two 2-1 splits to a respectable
8.8M shares for TWT owners and 4x to stockholders.
As someone who called PC Quote similarly last year (Ave. $1.5/share to
$27.5 at the high - took 4 days after hitting $10 to $27.5 intraday.
The firm had 7M outstanding, float of 2M, and CEO saying '95 =.15/shr.
This firm had nowhere near the TWT's revenue, but institutional buying
on MSFT news and internet play caused big gains. With ~5M total/2.5M
out (38M/15), and available float of 1.3M (2.2M Reg 144) might a net
of $.75/share/quarter cause big gains + hairy moments for a while?
Please review my thinking on this and see if anyone agrees that splits
of the 2-1 kind could happen next year. I was surprised to see up to
1-15, until I realized TWT might be doing a massive assault of the MM
group in the short term, and did not want to screw with 1-5 or 1-10
that would end up creating opportunities for MMs shenanigans.
Bob Lewis and his "partners" deserve better than what they have right
now for the sale of TWT, and I believe after the MMs are taken care of
by IB and Institutional support a split or two will be used to get
TWTI a respectable number of shares without mass dilution like ISGI
had. There may be a stock issue or two, but further stock dilution
is not needed once cash flow and earnings provide fuel for any needed
aquisitions.
The key then will be finding synergistic firms which fit well with TWT
and are viewed as long-term wins worth trading short term net for. If
Arnold S. and Don B. are as good as I believe any buys will be great.
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