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Strategies & Market Trends : Gorilla and King Portfolio Candidates -- Ignore unavailable to you. Want to Upgrade?

To: Jean M. Gauthier who wrote (3344)	7/1/1999 1:47:00 AM
From: JRH	Respond to of 54805

Threadsters: Looks like the new beta site is up and running. Time to test it out! Justin

To: Jean M. Gauthier who wrote (3344)	7/1/1999 5:58:00 AM
From: Mike Buckley	Read Replies (2) \| Respond to of 54805

Jean, You asked if I would buy Siebel at these prices. That's a tough one. The only thing I'm sure of is that, if I would buy, the stock would tank. And if I wouldn't buy, it would soar. I've got two observations and they send different messages. The first is that the stock has tanked 40% twice in the last 12 months. The first time it tanked was during the small-cap correction between July and October in 1998. The second 40% drop was between March and April (just a one-month period!) of this year. Based on historical trends, it is very possible that a better opportunity will present itself. The second observation is that during the period of time between those two events, the stock tripled. If this recent move is part of another exceptionallly upward move, waiting to buy will be a mistake even when (notice I didn't say "if") it falls 40% after the rise. As I mentioned about a week ago, I think the price will get lower than it is today. I'm very certain the PEG ratio will get lower than it is today though it might be at a higher stock price. When the stock tripled between October and March, it was off a stock price that was relatively low and a PEG ratio that was historically low for Siebel. If the stock triples again from the base created in April, I'll be surprised because it was such a higher base in all respects. Yet the stock has to rise "only" another 50% to achieve its second low-to-high triple in a 12-month period. The most important observation I can tell you is that if Siebel doesn't falter and if you hold for the long term, I'll be very surprised if the stock doesn't significantly outperform the market even if you buy today at what I think are high prices. (I wouldn't be surprised if the PEG ratio I discussed last week is 3.0.) On the other hand, if it does trip up as almost all leading front office software companies except Siebel have done in the last five years, buying at these prices could prove to be disappointing. Back to your original question (FINALLY!) about whether or not I would buy now. I use a system of buying leading gorilla candidates that I don't buy at a PEG ratio much over 2.0. A week ago when the price was lower it was at 2.5 if I remember correctly. No, I wouldn't buy at this level because it wouldn't fit my system. But I'm not making a recommendation, only an observation about my own buying habits. Hope this helps. --Mike Buckley