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Technology Stocks : Audio and Radio on the Internet- NAVR

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To: d. alexander who wrote (13084)	4/4/1999 8:29:00 PM
From: Mad2	Read Replies (1) of 27722

Dear d. alexander I've seen a variety of attempts by various posters to set a discount from which the parent of the spun ipo should trade (based upon the inherant value of stock held by the parent of the spun company). In the most recent case that I followed UIHIA/UPCOY, UIHIA holders indirectly held 1.92 shares in UPCOY (ie 77 mil divided by 40 mil, where 77 mi is the shares of UPCOY held by UIHIA and 40 mil is the total of cl A and cl B shares of UIHIA outstanding). As of last Thursday UIHIUA closed at 44 3/8 and UPCOY closed at 39 3/8, with one share of UIHIA representing $75.6 shares of UPCOY which is a 40% discount not counting UIHIA's other holdings est to be $500 mil or $12.5/share. I for one was quite supprised how UIHIA/UPCOY traded, with UIHIA at a discount of 50% when you factor in the $12.5/share for other value in UIHIA. My sense for this behavior is that it is dependant on float and supply/demand. Given that the free float of a ipo tends to be smaller than of the parent, results in a greater supply of shares for the parent and thus the lower price, relative to the spun business which benifits from the "attention/support" of the underwriter as well as the smaller number of shares. Going back to the argument presented by Christian 1310, he attributes NAVR's lower than expected price to date to the flow of new shares from insider/warrant holders as compared to zurdo's argument of short sellers. NASD's short interest on NAVR indicates that for the past 3-4 months shorts have been net buyers of NAVR, thus C's point of view is correct in my opinion. I do think in playing NAVR it's wise to focus on supply/demand (and watch daily volume) rather than speculate on arbitrage. Valuations of internets are not analytical, as such analytical methods shouldn't be relyed upon. Traders and trading volume are what sets the stage for these companies, thus studing the past behavior is similar situations will be more reliable and profitable. Regards, Mad2

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