COMSAT Message Board - Msg: 6125501

STOCKTALK

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Technology Stocks : COMSAT

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To: HIA who wrote (31)	10/22/1998 5:09:00 PM
From: Allen Furlan	Read Replies (1) of 55

I agree with your analysis, my opinion only. But I think the argument for tendering shares is stronger than you believe.. If the very smart money playing the arbitrage game is correct then the stock will drop considerably right after the cash is paid. My assumption here is that the players are assuming a successful tender and are still evaluating the stock at 34 3/4. A buyer of 200 shares today would pay 6950, and using 50% tender to make the numbers easy, would receive 4550 for 100 of his shares. His held shares would cost 2400. He expects a small profit,say 10% on his 6950 investment or expects to sell the second 100 at 30 or for 3,000. If he could sell the remaining shares for 34.75 his profit would be 10.75. I submit that this potential profit would merit a current price greater than 34 3/4. That is why I believe the stock will find level of between 28 and 30. If so those who do not tender would have been better to buy the shares post tender. I just acquired my shares via a put option assignment on Monday and have ordered the prospectus. I am thinking seriously about selling November 35 puts to increase my position. Would appreciate your critique of my assumptions.

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