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Technology Stocks : Westell WSTL

WSTL 6.030

-2.7%

Jan 9 9:30 AM EST

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To: P314159d who wrote (16317)	6/4/1999 1:31:00 PM
From: Andreas Helke	Read Replies (1) of 21342

My current WSTL position (1.3% of my portfolio) is the small remainder of my big bet on DSL stocks from 1996 to early 1998. I had decent success with trading WSTL in late 1997 and early 1998 but lost some of that again with loosing trades in late 1998. I no longer follow the DSL stocks closely. Last year I figured out that ORCT would probably be the better bet but unfortunately I did not exchange all my WSTL shares into ORCT. ORCT is my only current DSL stock with decent paper gains. I have serious (percentage wise) paper losses in PAIR and WSTL. Now I don't know if I should keep my WSTL and PAIR shares and just hope that when the ADSL market finally materializes that those companies will get a decent chunk of it. Maybe I should sell my losers to finance the buy of more MGI Pharma (MOGN) shares. This is currently the only stock where I would want to buy more in the current dubious investing environment. With interest rates close to 6% the stock valuations get stretched. And I think that currently an investment in the general stock market has a pretty poor risk/reward ratio. But with MOGN I think the main risk is price volatility. There could be plenty of that like a 50-70% down day if MGI114 fails. But I think that the current stock price is below fair value even if MGI114 fails. I am used to big downward volatility from my tech biotech and particularly DSL stocks. I have entirely given up trading. German tax law allows one to realize capital gains tax free if you hold the stock for at least one year. The holding period was raised from 6 months to 12 months at the start of 1999. I don't think that I can compensate this tax advantage of long term holding with any trading gains that I might realize. One disadvantage of german tax laws is that a takeover for shares is counted as a sale of the old company and a buy of the new company at the takeover price. There you have to hope that you bought your shares at least 12 months before the takeover. LGND is still one of my favorite biotech companies. But the stock price is far below of what I expected that it would be at this time and below what I think to be fair value. I have the impression that for many biotech companies investors not only expect that they are profitable before those investors are ready to pay a decent price. They further insist on proof that those profits are not in danger from any competitors product. Under those conditions you have to wait longer until the shares really rise. But I expect that LGND will have earnings of a few dollars/share in a few years. In this case the price has no other chance than to follow the reported earnings upward. Ligand has done some dubious business decisions like buying Seragen. At least for an outsider it did not look like they could afford to pay for that when the stock price tumbled last summer. They did not have enough cash to pay with that and the stock was in danger of going into a death spiral if it would have been necessary to pay with low priced shares. After doing a curious deal with ELAN where they not only got a drug candidate to sell but also cash on top of it ( I am sure they have to repay ELAN some day ) LGND now seems to have enough cash to last till profitability. Andreas

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