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Microcap & Penny Stocks : RISC 1/2 mill traded (96' worst ipo)
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To: petekoby who wrote (280)4/10/1998 9:48:00 AM
From: Robert Floyd  Read Replies (2) of 294
 
You know I can't tell you if you should hold or stay.

The biggest question to be answered is what RISCORP is going to get from Zenith when it sells the assets. We know that RISCORP is going to get at least 35 million (about $1.25 per share) and believes it's value is over $4.00. Zenith will pay somewhere between these two. The next biggest question: how much of that will the shareholders see. Two costs I see which will lower the value of the shares: cost associated with closing the company down and cost associated with the shareholder lawsuit (a class action of which I do not get to participate but you might). This does not even consider any penalties that the State of Florida might impose...something of which the State attorney alluded to many months ago, but I have not heard of anything since.

Here are what I consider to be best case estimates:

Purchase price $4.00 per share
Lawsuit $ .50 per share
Closing $ .25 per share

Leaving shareholders $3.25 per share

I would say that the stock would probably bring in no more than $3.25 and will probably do no less than $2.25. If you are a beneficiary of the lawsuit settlement, then it could be more.

Bottomline: limited downside risk with the potential of a 45% return. The payoff may be more than a year down the line.

In my case, I recently sold half of my shares to limit my risk. If the deal spoils, the last year of investment in this company brings me a 30% return. If the best case is realized, it brings me a 200% return. If I sold everything right now, I would see a 68% return.
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