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Non-Tech : Bill Wexler's Dog Pound -- Ignore unavailable to you. Want to Upgrade?

To: Bill Wexler who wrote (1711)	7/2/1999 12:58:00 PM
From: Marconi	Read Replies (1) \| Respond to of 10293

Hello Mr. Wexler: WCAP My primary interest on WCAP is it is a closed end fund selling at around 5 times current assets and not the usual 10-30% discount to assets, not as an 'internet' play. WCAP's restructuring occurred in the last year and the public does not seem to understand this. That the assets are internet mania stocks is largely beside the point. WCAP is an arbitrage play. One can buy the underlying holdings for around $5-6 and sell WCAP for around $25. With their limited means and much bigger money out there for mania stocks, I do not think any deals that WCAP might involve themselves in for the next year are going to change their asset base by more than a wiggle. Even so, one could still mirror the new holdings to neutralize their effect and hold the investment to realize the discrepancy between assets and price of about $20 now. Regardless of where the assets go, there is a $20/share premium for arbitrage with WCAP. For those that buy WCAP as proxy for internet holdings at around $25/share, why not buy the underlying holdings for around $5 equivalent. I believe it is public confusion over the shift from an operating loan company at around $1 per share with marginal earnings and frequent losses, to essentially a closed end fund that has a price/assets ratio that people are misinterpreting as a price/earnings ratio from operations. For the conversion from operating company to fund, that is a one time accounting measure and the next quarters should show the reported P/E declining as no significant IPO money is realized. If the public is buying the P/E idea, then as the P/E forward drops, so should the price of WCAP. WCAP's deal stream is largely over and has been in sharp decline, and little is in the pipe at this time. I've seen nothing to suggest WCAP's 3 operators are deal makers. They happened into the internet holdings through prior loans with conversion privileges. I expect in a year that WCAP, aside from any new deals they may be able to land with small money, should be reporting essentially no earnings. And I think it likely WCAP will then price more properly as closed end fund--at a discount to assets. The fact that WCAP holds internet stocks for the fluff in their fund which produces a temporarily appearing low P/E enough of a taint to put off the next year's arbitrage for you? As minor holdings, the aggregate holdings would seem to be a safe arbitrage Not to bet the farm, but a decent 10% position. Best regards, m