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Technology Stocks : Novell (NOVL) dirt cheap, good buy?
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To: Stuart Knapp who wrote (3703)9/17/1996 8:10:00 PM
From: E_K_S   of 42771
 
Hi Stuart: The more I listen to the fear stories that Novell is dead and the institutions are dumping the stock, the better I feel that my long term decision is still sound. Remember the "institutions generally always do the wrong things at the wrong time".

Here they are selling (for several reasons they try to rationalize) and the smart (conservative) money is buying based on asset value. Look, the balance sheet assets remain solid and the free flow cash flow is still positive! It is going to take time for the market to perceive the value in this company and may indeed take two consecutive quarters of positive earnings.

Anybody who thinks they will double their money in this company in two weeks are fools. Go trade "IDID" or "DNA". However, while you wait for Novell to turn the corner, sell covered calls with different strike prices and time periods if you want to generate income. VK said this was "dead money". However, I have done quite well with my covered call income. Remember the covered call writer wants the stock to remain constant for a long period of time. As a long term investor, I really do not care about the day to day moves. My immidiate observations are focused on the following key events:(1) the GreenRiver release,(2)InterOp show and other new product announcements,(3) Q4 numbers to be reported 1st week in December and (4)January 1997 ralley in anticipation of FANTASTIC Q1'97 surprise.

With the ralley of many of the other High-Tech stocks and a diversified portfolio, look at locking in recent gains by writing covered calls that offer good preminums. As far as Novell, it is still in a consolidation trend. The longer it remains at these levels, the higher the stock will eventually move. The $10 price must hold BUT more importantly we must not go down on heavy volume.

Once the shorts begin to cover and the institutions jump "BACK" in, the stock will move higher. I believe earnings will be the key event which will cause this to happen. New products and advertizing 'hype' just is not doing the job.

EKS
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