Djane, I thought It is time to recapitulate some of our SHORT friends on wall street. One of them was two so called smart FUND managers (M. McCain and Mr. Sanders )who said on 2/23/98 Barrons mag. interview with K.Welling.
Believe it or not their favorite shorts were.
1. Boston scientific, BSX. It was 54 then, guess what it is 78 today.
2. ASND. It was 28-30 then, now 46-54.
Ouch!! It must be painful, whoever are the investors with these morons should know what they do.
I wonder if they pay Barrons to publish their Garbage, as you recall, ASND dropped 2 points, BSX dropped 1-2 points that day. Unbelievable that some people believe these idiots.
Here are some excerpts from 2/23/98 issue of Barrons.
Q: Let's try talking about your shorts.
Sanders: One is Boston Chicken. We started shorting it
in March of '97. It was expensive on assets and sales,
has slowing asset turns. We are still short it -- intend
to hang on to our short for a while.
Q: That stock killed a lot of shorts that were early.
McCain: We weren't smart enough to be too early.
Besides, we're never forced to cover. No short is more
than a few percent of our portfolio. Although these
things are really expensive when we short them, we
know that they can go up 50% against us -- and still be
world-class shorts from where we shorted them --
because they can go down to nothing.
Sanders: We make sure we can afford to be patient. Q:
What are you short that hasn't cratered yet?
McCain: The other Boston -- Boston Scientific. I think
we're actually losing a little money on the position.
Sanders: Yes. We shorted it around the middle of last
November. It's a health-technology company, of
course, now trading at a lofty 52 or so times earnings.
At almost 11 times book value. It's too early to say
what's going to happen. But stocks with those kinds of
characteristics don't usually outperform.
Q: That's the only reason you're short?
Sanders: We don't really want to be specific, because
it hasn't happened yet. But what we can say is that
when a stock is priced at the kind of ratios Boston
Scientific is, the probabilities are, if something bad
does happen, the shareholders suffer. And we see
characteristics that improve the odds of something
negative happening over the next year or so.
Q: What sort of characteristics?
Sanders: Its asset turns are slowing. That means that,
to maintain profitability, its margins have to improve.
But its margins are already at 20% or so, so the odds
of that happening are not high.
Q: What else are you short?
McCain: We have been short Ascend Communications
since last March, so it's been a good short for us. But
it's starting to rally pretty fiercely -- even though it still
ranks pretty high on the short side.
Sanders: It sure does. It's one of our top-ranking shorts
-- meaning most expensive, trading at 7.2 times book
value.
McCain: Not to mention it's 5.5 times revenues, 43
times cash flow.
Sanders: There are lots of people in the
communication business and there are lots of
products. When one company is making a lot of money,
that just gives someone else an incentive to come up
with even better products. Ascend is not necessarily in
a sustainable position.
McCain: One of the marvels of capitalism is that high
growth rates attract a lot of bright, serious
competitors. And the market does mark these stocks
down -- eventually.
Q: Thanks, gents.
---
Libre Partners' Picks
A B C D E F G H I
Bear Stearns
BSC Dec '95 0.9 10.6 9.5 1.7 0.1 59.2 3.3
PaineWebber
PWJ Aug '96 0.7 7.1 11.4 2.4 0.1 48.3 5.4
TJX Companies
TJX Mar '96 1.0 20.9 24.8 6.0 2.6 6.9 17.9
Costco
COST Nov '95 0.4 20.0 26.0 3.8 3.9 3.1 11.8
Kroger
KR Nov '94 0.4 15.0 23.1 N.A. 4.5 3.7 16.7
Darden Restaurants
DRI Oct '97 0.6 -329.6 N.A. 1.8 1.6 -3.1 -4.8
Tele-Comm Liberty Media A
LBTYA Jun '97 17.3 6.0 8.2 3.2 0.2 343.4 60.1
McKesson
MCK Jan '96 0.3 65.4 32.4 3.8 3.8 1.3 4.9
U.S. Airways
U Apr '97 0.6 7.8 5.6 24.1 1.1 10.9 11.9
Utilicorp United
UCU Dec '97 0.2 4.5 14.3 1.6 1.7 4.5 7.7
. . . And Pans
Boston Chicken
BOST Mar '97 1.1 4.4 6.8 0.5 0.2 36.8 8.6
Boston Scientific
BSX Nov '97 6.4 49.1 52.7 11.1 1.1 19.1 21.3
Ascend Communications
ASND Mar '97 5.5 43.5 N.A. 7.2 1.3 33.9 37.8
Data as of 2/17/98
BR
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