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Technology Stocks : Ampex Corporation (AEXCA)
AMPX 12.40-15.6%Feb 4 3:59 PM EST
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To: Gus who wrote (3181)8/6/1998 1:07:00 PM
From: killybegs  Read Replies (2) of 17679
 
gus,

will answer shortly....just a note...Russell 2000 theory is borne out...Vanguard Small Cap index sold 168,000 shares in June leaves 227,000 to sell....

this persistant selling of Ampex and many many other small cap stocks reminds of 1989-1990's junk bond market..then you had government mandate federally and at the state level dictating the sale of junk bonds by thrifts, s and l's and insurance companies, creating a severe liquidity crunch and price declines...Buyers at the time made fortunes, such as Leon Black who bought Executive Life's junk bond portfolio and Icahn etc etc.

We don't have goverment mandates forcing the sale of small cap but we have a de facto forced liquidation by the herd which permits only the purchase of very liquid, large cap stocks. Money managers can't afford to own these right now.....

As in the junk bond markets, the buyers will be

1. The natural best buyer is the Companies themselves..Back then they bought in their own debt at deep discounts to the face value, boosting equity value...here its the reverse,,borrow cheap money and buy in equity at 4-5 times earnings.

2. Acquisitions by other companies...back then companies bought bonds and swapped for control equity...here plain old buy 4-5 times eps stock with cash or swap your own 25 times eps paper.
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