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Strategies & Market Trends : The Art of Investing -- Ignore unavailable to you. Want to Upgrade?

To: Sun Tzu who wrote (739)	7/3/1999 10:09:00 AM
From: jttmab	Read Replies (2) \| Respond to of 10653

All, I think that this three days of mourning (or jealousy) while Sun is in Australia is enough.... Since I had made a previous suggestion of dealing with the application of the Art of Investing with respect to overvalued stocks, I guess it's incumbent on me to put up some effort in that regard. I don't usually take short positions [though I have taken a few for post earnings sell-offs], here's an attempt in identifying some potential plays with the logic behind it. At least I hope it's logic. :0) Step 1: I used a stock screening tool, i.e., xls.com as the means of identifying overvalued stocks with a potential of Chapter 11 :0) Criteria used: Nasdaq stocks All sectors Debt to Equity >1 (They have more debt than equity) Assets to Liabilities < 0.7 (They can't pay the operating expenses; potential for increasing debt) Price to Sales > 5 (I took a handful of large cap tech sectors on looked at their valuations in Price to sales and successful companies seemed to hang around a valuation of 5) Five companies popped out: Aerial Communications (AERL) www2.hoovers.com clearstation.com 1999 EPS (4.23) 2000 EPS (3.70) 5 Year Growth Rate: 15% vs. sector: 25% Daily Volume: 150,000 Electric Lightwave (ELIX) www2.hoovers.com clearstation.com 1999 EPS (2.83) 2000 EPS (2.98) 5 Year Growth Rate: 40% vs. sector: 21% Daily Volume: 150,000 Excelsior-Henderson (Motorcycles) (BIGX) www2.hoovers.com clearstation.com 1999 EPS (1.32) 2000 EPS 0.33 5 Year Growth Rate: N/A vs. sector: 7.6% Daily Volume: 50,000 Level 8 Systems (LVEL) www2.hoovers.com clearstation.com 1999 EPS N/A 2000 EPS N/A 5 Year Growth Rate: N/A Daily Volume: 50,000 TCA Cable TV (TCAT) www2.hoovers.com clearstation.com 1999 EPS 0.98 2000 EPS 1.14 5 Year Growth Rate: 24% vs. sector: 20% Daily Volume: 140,000 This is as far as I've gone; the volume is relatively low on each of the issue and I'm not recommending any of these as shorts. Though I have created a shared portfolio to track the progress. So, I therefore expose myself to potential public humiliation for stupid short picks. techstocks.com Further discussion is welcomed and encouraged. Best Regards, Jim Note: I've found some discrepencies between Hoover's and other net sources and haven't reconciled or found which is in error.

To: Sun Tzu who wrote (739)	7/17/1999 12:44:00 PM
From: Stuart C Hall	Respond to of 10653

I know Sun is "down under" but he should like this from TMF: FOOL PLATE SPECIAL An Investment Opinion by Matt Richey Clear Vision at VISX VISX Inc. (Nasdaq: VISX) continues to move up after reporting strong second quarter results after market close on Wednesday. The leading manufacturer and marketer in the fast-growing laser vision correction industry reported earnings of $0.32 per diluted share, three pennies better than analysts' predictions. U.S. consumers are rapidly warming to the idea of laser eye surgery. The promise of a life without contacts or glasses is driving demand for the company's proprietary VISX System, which is composed of an excimer laser and computer-driven work station. During the quarter, the company shipped its 500th VISX Star Laser. Now, with the industry's largest installed base of lasers and hundreds more than its closest competitor, VISX is well positioned to capture a large share of the accelerating consumer demand. Last year, the company performed 400,000 procedures, and another 900,000 are expected this year. But with 157 million people in the United States who experience some form of nearsightedness, astigmatism or farsightedness, this growth story is just beginning to unfold. The latest 10-K does a nice job of detailing the highlights of the company's history: "In the early 1980s, experts thought it was impossible to operate directly on the front of the cornea. In 1987, doctors using VISX equipment performed the first procedure for the treatment of nearsightedness in the United States.... In March 1996 the FDA approved the use of the VISX System to correct mild to moderate nearsightedness. That approval was supplemented in April 1997 with approval to correct astigmatism. In January 1998 [VISX] became the first company ever to receive FDA approval to use a laser to treat higher myopia with or without astigmatism. In November 1998 [VISX] received the first -- and still only -- FDA approval for the correction of hyperopia or farsightedness with a laser." Last Friday, VISX unveiled its first nationwide brand advertising campaign with a full-page color ad in USA Today. Even without a formal ad campaign, VISX brand awareness has been spreading rapidly via word of mouth due to the success stories of thrilled patients who report dramatically improved -- if not fully-restored -- vision after what is only a 30 minute, painless outpatient procedure. Of course, the procedure has its risks and side-effects, but they are minimal and rare for the most part. VISX has 140 existing and 70 pending U.S. and foreign patents to protect its technology. The company expects that other excimer laser products that come through the patent process will infringe on the company's patents and thus require a license. Thus, the company's patents create a formidable barrier to any would-be competitors. In addition, the company earns revenue not only for laser systems sales, but also for each performed procedure through "VisionKey card" sales. This programmable card allows for the collection of patient data and software upgrades, but more importantly it is required to operate the VISX System. And, because a unique VisionKey card must be used with each procedure performed, the company earns guaranteed royalties for each operation. Through patent protection and strategic technology, VISX's business model is highly profitable. In the just-completed second quarter, the company achieved 80% gross margins and 54% pre-tax operating margins. Profits of $21.5 million understate the actual cash gains during the quarter -- with no debt, the company grew its cash balance by $37.1 million to a total of $189.4 million. In addition, working capital management showed a sequential improvement with the cash conversion cycle down to 58.7 days from 65.1 days in Q1. On a run-rate basis (Q2 net income x 4), the company's return on invested capital is a stellar 109%. With sales and earnings growing at a 100% annual pace, this stock doesn't look outrageously expensive at 73x run-rate earnings. For investors interested in learning more about the company, the Fool's active VISX message board includes insightful input from both doctors and patients.

To: Sun Tzu who wrote (739)	7/22/1999 11:56:00 AM
From: Sun Tzu	Read Replies (3) \| Respond to of 10653

Hello from the Down Under! Well, it's been a while and I thought to drop by and say hello. I am about half way through my trip. My first stop was at Hong Kong and I must say it was better than I expected it to be. Essentially it is a chaotic version of Tokyo. I found it impressive that so many people can fit in so little space, and yet leave plenty of room for hiking and rock climbing. I stayed at friend's place in the "suburbs" (what is the suburb of a small island?) and started most morning with a pleasant walk through the mountains. The weather was hot and humid and most days it drizled a lot. This is normally the kind of weather that I hate, but for some reason I did not mind it at all. May be because it helped to keep the air clean, or may be because I am on vacation and it is hard to tick me off then. The population seems to be overwhelmingly young. I could hardly find anyone out there that was over 60 and most people on the streets seemed to be in their 30s. Services in general are very cheap. Taxies are especially cheap. As is having a maid. On the other hand, most goods were more expensive or at best about the same price as in New York. Gone are the days that you could buy top quality items at 30~50% off the US prices. I think this is perhaps the most pronounced effect of the deflation on the US economy. My theory is that many companies are trying to sell as much as they can in the US, and this has pushed the US prices below HK's. Of course the Hong Kongese don't know this and still think that their prices are the best. They are surprised that their sales to tourists are much lower than before. Another surprising thing was the Canadian influence in HK. Before I left for HK, I decided to bring my friend something that would not be so easy to find in HK (or so I thought). I settled on buying a bottle of fine Canadian ice wine and some smoked salmon from the Fraser river. To my surprise, even the smallest of wine shops in HK has a fair selection of Canadian wines and the first one that I went to had 6 different kinds of Canadian ice wine! In contrast, you are lucky to find any Canadian wine in Australia, let alone an ice wine. The closest they have here is a fake kiwi imitation (it was frozen processed). You can also buy PC nachoes here (a Canadian brand). And there are stores called "Toronto Sports" and the like. There was even a "Sam The Record Man" store in one of the malls! Then I remembered that a couple of years before China took over HK, an influx of Hong Kongese emigrants into Canada (especially Vancouver, BC) began. I was in Vancouver two years ago and could see a significant Chinese influence on the city. Now I was seeing the other side of the coin. After HK, I came to Sydney. BTW, checking out of HK is a breeze; you can check in your luggage at the train station in down town HK. Then go explore the city some more before taking the train to the airport. Your luggage will be already be in the plane when you board it. The new airport is built on the water and I actually know some of the people involved in its design. But I wish I was flying into the old airport. I've heard it to be an experience. Ok, back to Sydney. It is in the middle of winter in the southern hemisphere and Sydney is cold. There is something not quite right about feeling cold in mid July in a place where palm trees are everywhere and the leaves are still green. But for some reason, I feel colder indoors in Sydney than in a Canadian winter. For one thing, Canadians know how to insulate their homes, and the houses in Sydney are actually colder than the weather outside is. It also doesn't help that I am in the Doublebay area near the ocean. Sydney is a fun city. It is a toned down version of Amsterdam. There are many things here that are legal or psuedo legal that you could spend time for in USA. Everything is way over priced here because of the hefty taxes (think 30%+) but also because the margins are higher due to the smaller population. If you are not a blond, then you need to be well dressed and clean shaven before you get a decent reception in some places (just being white -- which I am not -- doesn't cut it). On the other hand, showing up with a 3 day beard and a backpack goes a long way towards getting you cheap deals in travel agencies. There are a lot of backpackers here. Assuming you do look presentable, people are friendly and women will make a lot more passes at you than most places in the world. Next week I'll be leaving for Ayres Rock which is the largest rock in the world and lies in the center of Australian desert. A few days there and I will head towards Cairns for some scuba diving and rain forest camping. After that, if a few things work out in Sydney, I will take a two week bus tour from Cairns to Sydney and explore the entire east coast. Otherwise I will go back to HK for a few days. I plan to spend a week in Thailand before coming back to New York. This trip might take a month longer than I'd anticipated, but for once I don't mind being behind the schedule <vbg>. It is unlikely that I will have Internet access once I leave Sydney. So you'll have to wait until I come back to hear the rest of the story. Cheers, Sun Tzu PS what is wrong with the market? Can you guys keep the fort while I'm away? It does not look good.