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Non-Tech : Radica Games (RADA)
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To: Dani who wrote (2827)2/24/1998 10:02:00 AM
From: Hank  Read Replies (1) of 7111
 
I think you are making this situation way too complicated. This isn't about politics. It's about the toy business. As long as we are speculating, lets put forth a straight forward speculation of my own. We now a company comprised of Hasbro and Tiger. They see this young upstart called Radica making big in roads with a hot new product line that is selling like hot cakes. They ask themsleves, "How can we compete with Radica and take their customers away?" They put their heads together and come up with a new toy line of their own that is aimed squarely at competeing with Radica products. Somebody with an inside line at Hasbro and some very deep pockets knows this, so they begin to short the stock. They know that once the new product line is announced, it will cause doubt and panic to take hold among RADAF stock holders. As anyone who follows the market knows, stocks fall a lot faster on bad news than they go up on good news. Therefore, the short seller knows he must short the stock on it's pre-earnings run up in order to have his position established before the news comes out about Hasbro's new line. Once the announcement is made, he is convinced the stock will loose 50% of it's value very quickly. In the end the new Hasbro line may or may not compete successfully with Radica's products but the short seller doesn't care. He thrives on panic and the PERCEPTION that Radica will lose business.

How's that for a tall story? Only it may not be so far from the truth. Only time will tell.

Hank
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