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Microcap & Penny Stocks : WCAP - Winfield Capital: Insider buying
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To: Goinlong who wrote (479)3/17/1999 3:26:00 PM
From: NeverRight  Read Replies (1) of 1305
 
Well, I've been looking for another CMGI so I thought I would look here. The big difference in the two is that WCAP accounts its activities much like a mutual fund, so that the values of its securities holdings is reflected as an asset and any appreciation is taken as income. They probably have some ownerships that are not public and may be carried at cost, but basically the company is worth just what its book value is the same as a mutual fund would normally sell around its net Asset Value (NAV).
CMGI on the other hand accounts for its investments at cost because it is presently an operating company. They take their gains only when they sell part of the investment. The price of the stock is driven by the estimate of the value of the remaining investments it owns. But this value appears nowhere on the books of CMGI as it does on WCAP's books. This may change as CMGI will be required to turn itself into a mutual fund if it doesn't buy an operating company soon.
For example let's say both companies starting out at zero bought adjacent pieces of property for $100, which is now worth $1,000.
WCAP would show on its balance sheet assets of $1000, recording a gain of $900. So what you see is what you get. CMGI on the other hand would still be showing the $100, and you would have to do some work to know that the company is worth more.

Hope this helps.

Was looking to go long but will not buy. I have no short position.

Will the stock go up? Hey, this is a supply and demand business, not a valuation model.
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