10 reasons why SFE should go 500% Long article
1 hr.ago I attempted to post below article by cicking a response button(is this the only way?) to Mike Potter.And it did't appear jet!This is my first one and I wonder what went wrong.Is this normal such a delay?I got to go.To make sure it goes through I am sending it to you now.If you will get it and it won't appear on thread ,please repost it.
wellab
10 reasons why SFA should go up 500-% Long exhausting article
I think it is time to summarise all those bits of information about SFE in one not to clear report.
It would be also a great benefit for all of us if the postings
could be structuralised into seweral interlinked "subtreads" or subtopics to allow beter focus and monitoring of key variables influencing the price and easier access for readers to specific information.
I am ,and I guess you are ,sick and tired of loosing hours and hours by going through hundreds of irrelevant postings to find just couple of diamonds.
I picked 500% in the title because it was poping out most often in below analysis. and is below the middle of more carefull prognosis of 200-1200%.Help me to narrow this spread.
RESON NO.ONE:GETTING THROUGH BACK DOOR ON S I N G L E HOT IPO - INTERNET CAPITAL GROUP (ICP) = 500-700%
See article by Darren Chervitz (dchervitz@marketwatch.com) posted at : cbs.marketwatch.com
on March 16/ 99 4:16 PM ET about Flash Net IPO and symilar one on Feb 25 99 3:55PM ET about Point West Capital (identical address but instead of "net" after "current" there is world "software".If anybody can deliver the link to those articles ,please do so.Right now under those URL's there is today's story in the category "netdaily" and "software".By the way I would appreciate a tip how to retreive historical aricles from Marketwatch
(they can archive above under "columns","news",special reports"and 10 others categorys-so the easiest way seems to be a mail directly to Mr.Chervitz)
He mentioned 5 examples how the price of a company that has a stake in an upcomoing hot stock behaved.I will explore those further.
1. 07 /30/98 Cyberian Outpost (COOL)priced its IPO at $18.Unfortunate time,right when the 2.5 months bear market started (It can happen to ICG- see below)
Since beginning of July 98 price of Winfield Capital (WCAP) who owns ..........% stake in COOL started rising.First stop was 300%,then few days flat and down to catch the breath and up to about 750%.
I am finding symilar pattern in SFE 's "first forrun"
.Right now it is on it's first stop. Up 100% and down a bit ,right before next run of (judging from points 1-4 )300%- 700%
The day COOL started trading WCAP dropped to little below its first stop of 300% and then overall correction started and both stocks went further down.See below chart
.NOTE:I AM USING QUICKEN 1 YEAR CHARTS WHICH WILL BE DIFFERENT FROM SI CHARTS (THEY HAVE DIFFERENT TIME FRAME SETTINGS) AND SOMEHOW I CAN NOT POST THEM IN FORM OF LINK.THOSE PROCENTAGES ARE BASED ON 1 YEAR TIME FROM TODAY = MARCH 27/98 PRICES.To see those impresive charts is a must.Just punch 4 those pairs in 1 year percentage charts.
quicken.com.
2. 12/03/98 UBID was priced at $ 15.as a Creative Computers (MALL) spin-off.The run in MALL's prices started over 1 month earlier.First stop was on about 280%,short regress to about 220% and then up to 600%.Around Dec 13 MALL dropped way below its first stop to about 150%.
But UBID was hot and in the middle of big market run from Oct. lows and went up to 250%.So went MALL back to 600%.Since then both stocks behave similar.
This is example of another scenario for SFE: duble top.Provided general market conditions won't be bearisch at the time of ICG ipo - ICG can run up lets say 300% and savy players can make on SFE 300-600% on the way up ,150-400% on the way down and another 300% on uptick to the second top.
quicken.com
3.In Jan.99 Marketwatch (MKTW) started trading.Data Broadcasting (DBCC) which has a............% stake in MKTW started its run over 2 months sooner in the beginning of Oct.First stop: 100% then the longest breadh of all of them -about 3 weeks down to 50 %.Next stop was 500%.The difference in its downturn to the above 2 stocks is that on the day MKTW started trading ,DBCC went down only to 170-180%.
This is 80% above first stop and over 100% above lowest point in a "breath period" after first run..
So here is another possible scenario for SFE.Note that people are getting on the bandwagon sooner and sooner.In SFE case 4 months ahead of the action which actually rises the risk of longer breadh period after first 100% leg up and chance of a greater intermidiate pullback .To wait for the same 600% return 4 instead of 2 months means 2 X lower return
Assumming the latest period in SFE trading between $ 65-73 is a breath after first step up , it may never fell down after ICG ipo below $100 (after run up to lets say $240 = 600% from $40 base).Note the difference between DBCC or MALL.
Those were 1 time shots.SFE on the other hand has a pipeline full of surprises and if the company will play right PR game and time next IPO's right ,the stock can be right back on its way up.
Their chart can be more symilar to CMGI or WCAP -just one way - up. (see point 4)
quicken.com
4. 03/15/99 Flash Net Comm.(FLAS) priced its IPO at $ 17.Point West Capital (PWCC) who owns.........%stake inFLASH started its run in Jan 99( 2.5 months ahead).First stop 100% then for a week or two breath and down to about 85-90% and again run up to 330%.This one was the weakest run up (just 330%) maybe because it catched latest market correction or because FLAS - an ISP- like most of small ISP's is destined for extinction in the opinion of most marketwatchers and it is not to sexy stock anymore.
On its way down PWCC reached level of first stop ,over 100% as of today.
Above numbers were taken from 1 year chart.On 3 months chart below the numbers for PWCC are : 50% first step,200% top, back to 50% downturn.
quicken.com
SUMMARY OF "REASON ONE"
Not the SFE itself but general market trend from now till ICG ipo and the thread of Internet bubble burst are primary variables affecting the scope of SFE's run.Acampora is predicting DOW between 8500-11500 for this year.If the run to 11500 will coincide with ICG offering SFE can go in the upper range of above proxys 600-800% from $ 40 base.That's $ 240 to 320
Note the difference to above 4 proxis.They started their run 1-2 months before their baby's IPO's.We are 3-4 months before ICG ipo so,SFE has still time to form another base up or down from latest support level at $ 65.Maybe latest $64-73 will turn into solid 1-2 months base and it will count its few hundred percent run from there.In that case we are looking at $ 350-500.
This will not happen unless the company will do couple of splits EXECUTED IN A FLASH during the run. and unless they will maintain the excitment by steping up their PR efforts
Personally I have serious doubds about company 's ability to react fast and squeze from the best situation in which they are now couple of billions more in market cap.
If the DOW will hit 8500 before summer and then run to 11500 we are here for a bumpy ride but with the same effect,just few months later.
ICG will simply withdraw its offering and will time it for better times.SFE can tank 50% back to $ 30-35 (see their bottom in Oct 98) and this could be the new base.I sense here some danger.Even if we will have the best scenario and the DOW will run stright from 10 to 11K it may run out of steam just in time of ICG ipo.We may still get our 500%,but the dowturn in SFE price could be magnified by market correction.Compare the timing of COOL/WCAP.
Therefore getting ICG rollig as fast as possible is of CRUCIAL IMPORTANCE.
If ICG will wait longer (I bet they will) with pricing their IPO after eventual market correction it will allow SFE (like whole market) to recover to previous levels ( and I bet they will be in the forefront of recovery) thus alowing them to form higher base before IPO run.
If things with ICG will turn ugly we still have few more reasons to belive in the upside for SFE (see below)
REASON TWO: SPLIT CANDIDATE
quicken.com
This 5 year chart shows they split in 1994 around $ 6, in 1995 around $ 24 ,in 1996 above $ 30. There was no split in 1997 an 98.So they have at least 3 reasons to split soon:
1.almost 3 years from last split
2.high price lately
3.In aticipation for their lifetime run they better lern how to split on the go or say bye,bye to billion or two in marcet cap. $ 500 price sound too rudiculus!
Split NOW can add 20% to the price and can help establish higher base before the main run.
REASON THREE: GETTING THROUGH BACK DOOR ON M U L T I P L E HOT IPO's
This piece starts to turn into real analityc"s dissertation.The only missing thing is a 6 figure salary .So I encurage you people to contribute into this topic by listing all their rabbits from their pipeline and try to assess their potential in 2 aspects:
1.for company earnings,valuations etc
2. for contribution to the stock price
It will require info how big stake they have in each company and complicated calculations beyond my abilities.
Speculating a bit and assuming 5 less hot than ICG IPOS in next 2 years with each pushing the price of SFE a modest 100% net (net = eg200% up before IPO and 100% down after ipo) we can see 500% (again?) net gain in 2 years.
REASON FOUR: THE BACKDOOR HAS DOUBLE POTENTIAL = RIGHTS OFFERING
Again this requires to run some sophisticated models to come up with numbers and I want to post this piece before the end of the week.
Please develope this tought.Below very symplistic ,but valid line of tought.
Take a company X .You will receive rights to buy it on the first pricing of eg. $10.You got it.Now the Investmet Banker will start to spinn it
Week before first trade he will rise the price to $ 15 ,two days before to $19 and on the eve of trading to $ 24.First day pop on the board is to $50.
You got yourself a 500% gain ( this 500% repeats itself over and over - boring).Haven't you seen hundreds of such scenarios lately? I did and I am sick I wasn't a part of them!That means till now before I become proud shareholder of SFE.
If above 4 proxys had a run of 300-700% just on the promsie of owning hot IPO INDIRECTLY, SFE should go much higher up because here we will not only own those IPO's through SFE shares but also DIRECTLY and FOR THE LOWEST PRICE POSSIBLE.
Please,post here few real life examples what was the difference between first pricing and the high of first day trading.:
1.of few latest IPO's eg.above UBID,COOL,FLAS,MKTW etc
2.Price history of few SFE's IPO's most of them I understand were not too sexy
One helpful postig could address nuts and bolts of the process of of rights offering,how we will receive them ,can we flip them right away,is there a market for trading the rights without buying first,is above described process correct in SFE case,what was your experience with previous offrings? et
Assuming 5 rights offerings in next 2 years in the ratio 1 offer for 5 SFE schares ,we can invest an amount equal to our SFE holdings (5 X 20%)
This alone can duble and triple those investments.How to calculate those gains into additional,hidden appreciation of our SFE shares.? Can this duble my overall investmet even in case SFE will go down? Give me some formula and number.
AND IF YOU KOW ABOUT ANY OTHER COMPANY OFERING SUCH A RIGHTS ,LET ME KNOW -I'LL CONSIDER TO BUY IT ON THE SPOT.
REASON FIVE: FAVORABLE VALUATION AND STATISTICS IN COMPARISON TO PEER GROUP
Again this requires seperate dissertation .
The peer group would be CMGI,WCAP(maybe SFE will follow their latest nice pop to1800% in a year -go and see why they did this and see if SFE has some of the ingrediens of their success which could be a next reason to buy SFE)
PWCC and some other public Venture Capital firms operating in symilar teritory (getting crowded-show me SFE is ahead of crowd,please)
Just to throw random numbers:
SFE CMGI PWCC WCAP
1.P/E 20 118 n/a 3.42
2Price to sales 0.87 90 9 69
3. 5 years EPS growth 68 20 9 n/a
4.net income mln 110 16.5 1 --2
5 EPS 3.22 1.49 1.12 4.5
Sorry this git reformated during sening
It would be nice if somebody could do a formal comparison to whole spectrum of the group with more indicators using some web page and post the link.
The numbers look rather beautifull ,there is a lot of upside potential (you guess it -around 500% add or take some)Do some more specific job in showing eg:
If SFE would have CMGI p/e the price shoud rise again 500% ,SFE has 7 X net income than that of CMGI jet is priced (P/E) 6X less etc.
If you will compare those numbers to those 2 non -VC cos. which benefited so much from "back door phenomenon" MALL,DBCC, you will come to conclusion that SFE should run 2000%.They run so much without having a quarter of cover in fundamentals SFE has. The only comparable to SFE numbers (like P/E of 4) I know ,has another Internet wannabe -Zapata (ZAP)
REASON SIX; GOOD EARNINGS PROSPECTS, HEALTHY FUNDAMENTALS ,NICE GROWTH
Even if there would be no IPO the private companies and the other VC cos. are producing earnings ,unlike some of above examples
On the tread there is enough posts regarding this
Beuty of such a "mutual fund" is a lower risk but a downside is they are exposed to general market conditions more.
www.iionline.com/guest/copage/com frm asp?ticker=SFE
on Feb 25 99 posted nice valuation of SFE .They tried to add the value of all those elements:
--just TLAB is worth $ 27 per SFE share and growing
---if ICG will receive only 30-50% of Cmgi market cap that would be another 13-21 $ per SFE share
---Intellisource = $ 4 per SFE share
---Pac -West = $2
and so on.Whats more important ,some of them posted 40-50% earnings growth in 98.Give me past and projected earnings growth of all the cos,please.
REASON SEVEN: HISTORY OF 1500% GROWTH IN PRICE
See post # 2458 about SFE history on SI by Michael Porter from March 25/99 (sorry no link wchih does't work)
SFE in 1993 after collecting some number of cos.(same story today,but cos .are much more sexy) and starting to bring them public went up in price 1500% in 3 years.Finally something else than 500%.So,if they did this then ,they can do it now -right?
Again we can use more specific comparison to both of those times. on the background of general market trends.
REASON EIGHT: INSTITUTIONS BUYNIG ALERT
This can be the most serious reason here.I am looking for alert guy,who will go back few weeks and compare closing and opening prices of SFE. See if we have a pattern developig here...Such a post will show the pattern of institutions loading up this stock. They have long way to go. 24% ownership in SFE versus 48% for CMGI.Who else can trade after hours and at night?It would be nice to get a sense of the volume there.
REASON NINE: VOLUME ,VOLUME,VOLUME
Till not to far back the average volume was 160-190.Now we see average volume around 1200.THAT'S 7 X MORE!!
One day it was close to 3 Mln.This is what puts instititions ,traders,newsletters,advisors on alert.If volume will keep high,they will start to issue recomendations and jump in themselves.The problem is ,volume (although still 3-4 times higher than average) is drying up a little and the support at $65 may get weaker.Such a little problem can be corrected by one nice press relase.Another one can push the stock into new hights.So,Sir we and you I guess may use one now.
The fact that SFE is sitting on the upper Bollinger's band for a while now deciding whether it will gap up or retread a little shows it needs little PR push now.
REASON TEN :POSSIBLE NICHE TO SURVIVE EVENTUAL 10-15% MARKET CORRECTION
It is quite possible that recent SFE's activity and strong pipeline with rightly timed IPO's could overweight influence on SFE 's price of eventual general market deterioration or at least cushion it a bit.We can use some comparison from the past where SFE was in symilar good position but the market dipped.
FINAL TOUGHTS
This looks to me like the best medium term pick I came across.It is so visible ,so obvious and so easy to virtually point the date and the price on this future date.(ideal for playing their options) that even analitycs can do this.And most important,the future price is very,very right.It is so right to me that I cashed a stellar preformers making lately 5-10%/week like SUNW,EMC,AOL not to mention CMGI and bought into SFE.(thought cashing AOL looks like a mistake).
It seems SFE's first 100% run is attributable mostly to reaction to their announcments about moving into Internet and nice PR effords.The back door phenomenon
which can push the price to $240-350 hardly started jet.
The beauty of SFE is they can repeat above described pattern of rise and fall over and over till they will run out of IPO's.Volatile but how predictible with possible net effect of 500-1000% in 3 years.Volatility could be greatly reduced if SFE would pull out a series of IPO's spaced one after another in eg.2 months.This way the downturn after each IPO would be reduced and interrupted by next wave of run for the next IPO.
The single biggest risk to my scenario is the long period of time till ICG IPO.If the market correction will start in April and last 2.5 months plus another 1.5 months for recovery there could be no ICG ipo till September-October and SFE could dip to low 30's Many are calling for correction and frankly there is a need for one soon..In that case it doesn't make sense to buy it at $69 when you can buy it for $34 later and still benefit from all above reasons.
On the other hand the stock can rally anytime now and if we will hesitate to buy more we can be left behind. The only logical solution would be if this rally will start now.It will .Sooner or later.So why not sooner ?
Conclusion:,let start a little rally here people.Couldn't you get a little proactive in next few days and drop a note to some of hundreds of newsletters,advisory services,alerts and all those people who are sending you their picks.?.Send them your pick for a change,especially when this pick is objective ,most probable and so expolosive. The sooner the rally starts the higher it can go and it can remove most of the risk of a downturn at the same time.If correction will cut SFE in half lets cut it from the level of $265 instead of $ 65.I belive as a group we can move the market and the best opportunity is now because of :
--lower holiday volume
--more time on our hands during holiday
-- market going down (03/31) and people are looking now for quality shelter which SFE represents.Unfortunately FOR THEM they don't konw the potentioal of SFE jet . So,let them know.
--as of today,there is about 50 internet IPO's registered.Till ICG offering there could be another 50 poised to siphon from market as much as 500 bln$$.In such a crowded enviroment to get our message out will be much easier today than tomorrow.In face of so many front doors open people can ignore ouer little back door
March 31 update.
For 3 days now I am trying to bay more at $67 with no success.It closed March 30 at $ 68 and opened 03/31 at $ 70 (institutions?).I watched it for few hours and
I was amased by the strenght of it.Whenewer the price dropped below 68-68.25 the mumber of bids jumped from single and double to triple digits.Seems there are
many buyers waiting for $ 1-2 weaknes to jump in.The new support at $68 is forming. Another indicator of strenght is that despite of:
---day traders moving out after 3 PM
---127 pts drop in DOW
the stock closed at yesterday's close and for few hours went "upstream" - up while the DOW was dropping.
Can anybody post more formal technical analysis here?
Posting links to threads and pages where they discuss general market direction and its tehnicals would be wery helpfull here.
I would like to see somebody on this tread to post everyday short overview of current day preformance and outlook of this stock.
Report about today's action on SFE -OPTIONS would give us short term insight into future direction of this stock.
To collect all relative links on one page would be a great resources mine.Actually,if somebody could establish a web page about SFE stock with all those topics nicely organized ,this would be a blessing to our case.
OPENING NEW TREADS ON BB's ABOUT ICG WITH ALL THE AVALIABLE INFO AND LINK THEM TO THIS ONE IS CRUCIAL!! (I don't know how to post this piece on the tread jet)SO IS LINKING ALL RELATED TOPICS(like : IPO's,"internet",hot stocks ,"upcoming giants" etc.) AND THREADS ( CMGI,WCAP,PWCC ,ALL SFE COMPANIES ECT.)
This can deliver a lot of helicopters to our driveways (see add on CNBC) but don't expect them to just fall down from the sky.Do something!
To cover all this ground is behind the scope of one person.That's what discussion groups are for,aren't they?
And of course please,pour few pails of cold water on my bulish head .
Let me finish with rethoric question.
How much could ICG be worth if loosing big money Priceline.com was worth 10 bln $$ on first day of trading?
Wellab
I am giving up on correcting speling mistakes.There is to many of them.sorry. |
