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Strategies & Market Trends : Shorting stocks: Broken stocks - Analysis -- Ignore unavailable to you. Want to Upgrade?

To: RockyBalboa who wrote (2392)	6/29/1999 2:23:00 PM
From: Q.	Read Replies (2) \| Respond to of 2506

Thanks, IS. APGRD is a paging stock, which is a lot bigger company than your typical reverse split situation. Just the same, it looks like the stock price dipped below $1 earlier this year, so that is probably why they did the reverse split, so that they stay above the $1 listing requirement for Nasdaq. I'll try to check the valuation. It's a paging stock, so we can compare it to its peers: Paging Network, AirTouch Communications, Inc., Metrocall, Inc., PageMart Wireless, Inc., and Skytel. A couple of years ago I shorted paging stocks, so I know this routine. Here we go: The companies are all quite large, and have lots of debt. You can value them on the number of subscribers. The stocks tend to be highly correlated, so there might not be a tremendous shorting opportunity for picking just one of these stocks, vs. the whole sector. Paging Network (PAGE) is the biggest. It has 10 M pagers in service, and an enterprise value of $1.8 B long term debt + $0.4 B market cap = $2.2 B. That puts a value of $220 k per customer. They did the merger with Mobile Media, which is similar in size, so I don't know what the current value is. Pagemart (PMWI) has 2.5 M pagers, and an EV of $1.6 B debt + $0.2 B market cap = $1.8 B. That works out to $720 k per customer. Before the merger earlier this month with Mobile Media, Arch Communications (APGRD) had 4.3 M pagers, and EV was $1.0 B LTD + $0.065 B market cap = $1.1 B based on todays stock price. That is $255 k per customer. (I haven't taken into account the Mobile Media Merger, or any other merger, which probably affects this calculation.) APGRD has issued a lot of new shares recently, because of the merger. I don't know how much the selling of these shares might impact the stock. I tried shorting this a minute ago, but my order was cancelled. I assume there was no borrow.

To: RockyBalboa who wrote (2392)	6/29/1999 3:02:00 PM
From: Q.	Respond to of 2506

IS, I found APGRD shares at another broker and sold a few. I found that I had to hit the bid to get a fill. There weren't any buyers. I sat for a while at 1/32 above the bid, so that I had the best asking price, but nobody took me up on my offer. Looks like a whole lot of consecutive trades filling on the bid.

To: RockyBalboa who wrote (2392)	7/3/1999 12:39:00 AM
From: Q.	Read Replies (1) \| Respond to of 2506

List of stocks being dropped from Russell 2000 index earlier this week has some potential candidates for being broken stocks: russell.com Last year I remember this list had a lot of favorites of shortsellers. Same is true this year. This year the list includes ZONA and WDRY, which were Asensio shorts. Some other short-sellers' favorites this year are TAVA and VVUS. It also includes two stocks from the Thermo clan, including one that I seriously considered shorting more than a year ago: TLZ. Wish I had. It is now down to 1 3/4. The reason I didn't short it was that I talked to management on the phone while doing my DD. I should know better by now.