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Microcap & Penny Stocks : ORTH - Undervalued stock at 17/32?
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To: Daniel Miller who wrote (55)3/16/1999 2:02:00 PM
From: Jill Collins  Read Replies (1) of 99
 
Merger news is good for long term shareholders. Not good for "pump and dumpers." People on this thread have been telling others to buy ORTH only as a long term investment and that the merger news would be good for long term shareholders.

I calculate the stock exchange to be approximately 1 share of Pentegra Dental Group (AMEX: PEN)for each 2.8 shares of ORTH owned. At the current price of PEN at $2.12 this translates into an arbitrage price of ORTH at about .75 per share. The stock exchange agreement was calculated on figures close to this.

Here is why I believe the stock transaction with between ORTH and PEN is good for long term ORTH shareholders:

1. PEN is up .50 in the past few days and .70 in the past few weeks. In other words, if PEN trades at $3.00 then one share of ORTH is worth about $1.07. If PEN trades at $4.00 then one share of ORTH is worth about $1.42. Etc. The 52 week high for PEN is about $9.00. This translates into about $3.21 for each ORTH share. I see a real possibility of PEN reaching its 52 week high in the near future. Following are some reasons why.

2. PEN is a brand new company. It began operations in the Spring of 1998 and has never shown a loss. In its first 9 months of existence it posted a .23 EPS with $26 million in revenues and net income of $1.7 million. It is expecting $70 million in revenues in the upcoming year.

3. PEN started with 50 practices in the Spring of 1998 and added 31 more in 1998 for a total of 82 practices. After this merger it will have 97 practices. In short, PEN is growth oriented.

4. The President/CEO James M. Powers Jr. D.D.S. has options at $3.18 and $6.12. This is a nice incentive.

5. The original founding practices hold 3 million shares which could have been sold March 31, 1999. An extension agreement has been reached which provides that the majority of these shares cannot be sold until March 31, 2000. Dr. Powers stated: "We appreciate this vote of confidence by our founding shareholders. It means to us that they understand and agree with our plan to make Pentegra a driving force in the industry. Perhaps even more significantly, it signifies that we can expect their help and full support in continuing to expand the scope of the Company while adding value to our shareholders' investment."

By the way, the website for PEN is pentegradental.com

Sam Carr is the Sr. VP/CFO. His phone number is 602-952-1200. He is extremely optimistic about PEN's future.

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