Tony, Pure Energy and Insta-heat will have IPO's in 1997. Their value to KNIC before those IPO's will be based on the market perception of the potential markets for both companies. For example if Knic announces the IPO for Insta-heat, first for April/1997, the investment banker will begin to hype it up in order to generate max. interest. They will have "road shows", conference calls, mailers, broker calls. etc. KNIC stock should then adjust upwards to the perceived value to KNIC's 25% stake, then the I-bankers will have an easier time of valuing the IPO. Same will happen with Pure Energy.
For example, If DLJ in all its presentations for Pure Energy, presents a good case for a multi-billion in sales corporation once all distribution contracts and all joint venture ventures are in place, then the market could BID-UP knic prices to adjust to its 38% stake. For example, if the market perceives a $2Billion market cap for Pure Energy based on DLJ estimates of $1-1.5B in sales in first 2 years of operation, then its value to KNIC will be $2,000,000,000*.38= $760,000,000 value to KNIC. Now, Knic's shares outstanding are 15.1M divided into $760M = $50/share. Therefore, Knic shares should be at least $50/shares for Pure Energy, and higher for core business value, even higher when the 25% stake in Insta-heat is valued by the market.
I don't like to hype, but the above value is the TRUE POTENTIAL OF KNIC SHARES, once all information is disseminated.
Keep in mind though, that the analysis I made above is not an exact science!!! The market is run by greed and psychology. What form of greed and psychology takes place on KNIC stock is anyone's guess.
SHORTS
I would think that no more than 75,000 were covered yesterday and another 75,000 to 100,000 shares today. The remaining volume short term profit taking from investors and MMs that bought stock under $6.
I disagree with you, JUAN, on the SHORTS. My sources at several firms put the number at close to 2.2M, since most of the off-shore pirates got bold and began to short the stock that represented their last 1/3 position conversion.
I also TIP my hat to KNIC management for taking such a bold move in suspending the conversions. But, judging by the market move the last 2 days, it looks like without a doubt, manipulation was going on. Now, these Off-shore pirates are getting what they deserve. The screwed around with the wrong company!!
Thank you Mr. Knickerbocker for taking the necessary steps to protect your shareholders, your debenture holders, your company.
Ciao
TOM |
