Electronic Contract Manufacture (ECM) Sector Message Board

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Strategies & Market Trends : Electronic Contract Manufacture (ECM) Sector

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To: kolo55 who wrote (2032)	5/6/1999 7:26:00 PM
From: MGV	Read Replies (1) of 2542

There is no point on which to argue. I found your statement that the market "agrees with [your] views" too pompous to pass up. Aside from being way too self-congratulatory - even if it were accurate - the statement isn't at all accurate with respect to two key names in this sector: FLEX and CLS. On 3/16 CLS was trading at $28 and FLEX at $45.50. You abruptly dismissed another poster's opinion on CLS and stated your "view" - i.e. "relative fair value for CLS to FLEX was 28-30 to 42", respectively. You have been way off the mark and, given your tendency of self-promotion, it bears being noted. The market is now pricing CLS at 37-40 versus FLEX, which closed today at 45. Over that time FLEX is down $0.50 while CLS is up $9 at 36 15/16. On a percentage basis the difference is even more dramatic. CLS is up 33% absolute and a little over 34% relative to FLEX. Moreover, the move is wholly supported by fundamentals. CLS' revenues grew 46% in the latest quarter. Forward guidance is strong. Management is calling for $10 Billion in revenues by 2001. Everything about your view on these two is grossly off the mark. On a forward price to sales basis CLS is still at a significant discount to FLEX even though it is significantly higher than where you pegged fair value relative to FLEX. Your relative valuations just don't measure up and the market certainly has not supported "your views." As I said at the time, I like both CLS and FLEX. I liked CLS a little better on valuation. Your call to short CLS - that is your call - is especially irresponsible in light of the people posting here who seem to indicate close to blind acceptance of what you write. Advocating any kind of short is an extremely risky call that can expose the short to unlimited liability. In this example it is egregious (upon analysis of the fundamentals of the two names.) Between CKFR, VLNC, and this call, let me suggest you get out of the business of self-congratulation and learn a little more humility.

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