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Technology Stocks : Verity (VRTY)
VRTY 2.4000.0%Dec 22 4:00 PM EST
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To: richard p. martino who wrote (277)2/27/1997 6:34:00 PM
From: JACK SHOYKHET   of 1011
 
Richard:
The reason I purchased VRTY at $10/share is I do not care what they will do this quarter. My investment strategy is based on 12 -- 18 months increments. You guys are all trying to time the market -- you will loose every time. Take a longer term view.

Using Kumar's analogy, VRTY is a "cook" in the kitchen, while all of its customers are "servers." You will normally leave 10% to 15% tip for a server if the meal is good. But if cook gets sick, your business is out of luck -- you might as well close the doors or find another cook.

Verity is a chief -- they create value, others just offer it and get the tips. This company's P/E ratio is high, but guess what, so are other thousands other high tech companies. You will pay premium to see Michael Jordan play... Just rememebr US Robotics, Iomega, Netscape and others last year -- their P/E's were in 500 to 1000 range. And you paid for it!

The point is -- take a longer then a month view. If you truly understand their technology -- you will appreciate the high P/E ratio. They will do .35 next year; with the current P/E their evaluation will be in high 20's to low 30's. Thats 250% return on my investment in 12 to 16 months.
I rest my case. Good luck.
Jack
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