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Technology Stocks : Y2K (Year 2000) Stocks: An Investment Discussion
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To: Risky Business who wrote (1457)10/29/1996 11:35:00 PM
From: Mondoman   of 13949
 
I'm not a "compulsive" shorter, I'm a *great* shorter!!!

I treat short sales like any other investment. I'm
not short CACI because unlike VIAS, DDIM, and ZITL its price
much more accurately reflects its underlying value and growth
prospects.

A billion dollar backlog in work doesn't impress me. I
wouldn't care if it were a ten billion dollar backlog. In fact,
a backlog for a consulting firm actually raises some red flags in
my mind. The company currently has 3400 employees, and as I pointed
out in a previous post, when you look at the revenue generated
on a per-employee basis, you get the impression that the company
is not very efficient. Revenues are recognized when they FINISH
a project, not when they sign the contract.

The dollar amount of a contract is irrelevant. What is important
is the final contribution to the bottom line. I could get a billion
dollar contract from the Air Force to repaint every F-16. If
my fixed costs are 950 mil. and I'm also uncertain I'll be able to
hire enough painters to finish on time, then I guess I may be in
a bit of trouble as my cash flow turns decidedly negative.

It always makes me chuckle when one of you guys start throwing
around these contract amounts as if it the checks cleared the
bank yesterday.

Just for fun, let's do this: I'm going to pretend I went short
on CACI today at 16 a share. This will give you a little head start.
Let's check the price of my pretend investment in 6 months.
Looking into my crystal ball I predict that I won't be up or down more
than 20%.
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