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Strategies & Market Trends : LastShadow's Position Trading -- Ignore unavailable to you. Want to Upgrade?

To: IA who wrote (16693)	7/8/1999 8:14:00 AM
From: Jay Lyons	Read Replies (1) \| Respond to of 43080

Hey guys, Haven't been trading the last couple of days, looks like everyone had a great day on Monday. While I usually stick to the gaps, I will try to take a position in TSFW this morning based on the following Herb Greenberg article. As I've mentioned before, positive articles from him are rare. I used to just kick myself for not buying stocks that he mentioned positively, now I've begun buying them. The last one was USFS, which I've had from 19 and have added to on it's pullback. >>No domino theory: When one company in an industry implodes, it's often a matter of time before its competitors suffer the same fate. Yet money manager Scott Turkel of TCM Partners in Rowayton, Conn., no stranger to this column, doesn't expect that to be the case with TSI International Software (TSFW:Nasdaq), which is considered by Wall Street to be a direct competitor of New Era of Networks (NEON:Nasdaq). Yesterday New Era's stock tanked 56% to 19 7/16 after the company warned of an unexpected loss in the second quarter. TSI also slipped, but by only 9% to 23 1/4; Turkel says he had hoped it would have fallen more so he could have bought more. Why should we care about what what Turkel says? He's on this column's honor roll with A-pluses for his past mentions here of Verity (VRTY:Nasdaq) and Unify (UNFY:Nasdaq), when both were Wall Street outcasts. (They both have since zoomed.) He tends to like underdogs in arcane industries. TSI's claim to fame, for example, is a software that helps other software applications within a company to talk to one another as well as to databases and other platforms. In the old days of five or six years ago, companies had to hire programmers to link each program. Now this form of middleware, as it's often called, does it. "When you're looking for companies, you want to look at someone that three years from now will be a $700 million company where the market opportunity is enormous," he says. "What would I want to buy Colgate (CL:NYSE) for?" Fine, but what makes Turkel so confident that TSI won't go the same route as New Era? An important reason: He believes TSI has taken marketshare from New Era. TSI CFO Ira Gerard will only say that TSI has "replaced" Neon on several accounts, and that TSI only sees New Era on about 15% of its prospect list. TSI officials also say that unlike New Era, which has grown aggressively through acquisitions, most of TSI's growth has come from internally generated sales. New Era declined to comment on the market share issue. As a result, Turkel believes, TSI's revenue growth, operating margins and earnings growth will be sharply higher than most analyst estimates (52%, 15%, 61%, respectively, versus 44%, 13.2% and 50%.)<<