Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : Broadband Wireless Access [WCII, NXLK, WCOM, satellite..] -- Ignore unavailable to you. Want to Upgrade?

To: SteveG who wrote (462)	7/8/1999 11:37:00 AM
From: transmission	Respond to of 1860

Check out the Commco Tec press release today put out by WFI/Wireless Facilities Inc.

To: SteveG who wrote (462)	7/8/1999 11:54:00 AM
From: SteveG	Respond to of 1860

Fahnestock on TGNT (June30th): Teligent, Inc. (OTC-TGNT-51 3/16) TGNT's public market discount has "bottomed" at 50% five times in the last 18 months Investment Opinion: We are reiterating our Buy rating on Teligent. Our year-end 1999 target price of $58 reflects a 30% public market discount to our net asset value of $83 per share. The 13% upside implied by this target, qualifies the stock as a buy. Key points: · Despite its limited operating history, it is possible to estimate Teligent's net asset value. Teligent launched operations during the fourth quarter of 1998 so there are no "historical" results to analyze. Despite this, it is possible to estimate the Company's net asset value. This reflects the fact that nearly 90% of TGNT's asset value is tied to results ten years hence. That's not to say that near term fundamentals aren't important - they are in that they provide an ongoing check to the Company's operating trajectory and can impact terminal values by virtue of their "domino-effect" as these changes ripple through our 10 year discounted cash flow model. This domino effect served to lift consensus asset values for the Company by roughly 66% over the past 18 months. · Year to date, Teligent's public market discount(s) have mirrored its more seasoned peer group. By combining our year end 1999 net asset value estimate with "consensus" 1998 estimates it is possible to chart TGNT's public market discount(s) to its estimated net asset value over the course of the last 18 months. Over this period the stock's public market discount has "bottomed" in the 55% range five times, and peaked at around 30% six times. · TGNT's current 40% public market discount qualifies it as attractive but not a table pounder. Given the frequent (historical) opportunities one has had to buy this stock (and other CLECs) at a 50% plus public market discount, we intend to temper our enthusiasm for TGNT shares until the stock pulls back into the low to mid $40 range. Should the stock reverse its current downward bias, we would lighten positions as it approaches the high $50 range. Valuation Our discounted cash flow model (attached) summarizes the key fundamental and valuation assumptions that drive our Net Asset Value for Teligent. The top two thirds of this table reflect our fundamental forecast. The bottom third highlights our valuation assumptions. The mathematics that support our $83 per share (year end 1999) net asset value estimate runs as follows: The net present value of Teligent's free cash flows (EBITDA less capital spending) discounted at 14% for 10 years approximates $886 million. The net present value of Teligent's liquidation value 10 years hence (based on a multiple of 10x cash flow and discounted at 14%) approximates $5.5 billion. The sum of these two estimates ($6.4 billion) reflects Teligent's gross asset value. After subtracting roughly $467 million of net debt, the company's net asset value approximates $5.9 billion or $58 per share. These figures are detailed in the box in the lower left hand of our 10-year DCF model. The box in the lower right hand side of our 10-year DCF model highlights the sensitivity of our target price to different discount rates and terminal multiples. Although a strong case can be made that our 14% discount rate is too steep and our 10x terminal multiple is too light, these metrics historically have successfully identified undervalued CLEC stocks and, as such, we think they represent reasonable (and useful) valuation metrics. Teligent's historical public market discount(s) have mirrored its peer group. The accompanying two charts offer a historical perspective of Teligent's estimated 1998 -1999 year end net asset value(s), its stock price action over this period, and the stock's corresponding public market discount to these estimates at any point during this period. · Top Chart: This chart depicts Teligent' price action from February of 1998 to the present. A line representing year-end 1998 consensus net asset value estimates and our year-end 1999 estimate for the company has been superimposed on this price action. · Bottom Chart: The bottom chart tracks Teligent's public market discount i.e., the spread between the company's stock price and its estimated net asset value, at any given point in time over the past 18 months. · History: During 1998, consensus net asset value estimates for the Company clustered in the $50 per share range. These estimates were raised to the $60 level at the beginning of 1999 (to reflect the inclusion of one more year of positive cash flow and one less year of negative cash flow as the discounting period is shifted one year out). After the Company reported first quarter results, consensus estimates for year end 1999 were raised to the mid $80 level (which mirrors our current $83 estimate). By combining our year end 1999 net asset value estimate with these historical consensus estimates, it is possible to chart TGNT's public market discount to its estimated net asset value over the course of the last 18 months. Over this period the stock's public market discount has "bottomed" in the 55% range five times, and peaked at around 30% six times. Given the stock's volatility (which is largely a function of its limited float), the relatively skinny band within which this discount expands and shrinks is remarkable. Over the past 18 months, TGNT shares have never traded at less than a 20% public market discount and never traded below a 61% discount. In this regard the stock trades like dozens of Cable TV, Cellular, PCS and CLEC stocks.

To: SteveG who wrote (462)	7/8/1999 11:56:00 AM
From: SteveG	Read Replies (2) \| Respond to of 1860

Fahnestock on TGNT (July1): Teligent, Inc. (OTC-TGNT-59 13/16) Since 1998, TGNT's discount to NAV has “peaked” six times at around 30% – we're there again. Investment Opinion: We are maintaining our BUY rating on Teligent despite the fact that the stock is two points higher than our year-end target price of $58. We think yesterday's 8 point (interest rate related) run-up will be short lived and therefore don't want to “whipsaw” our ratings from buy to hold to buy. If the stock fails to pull back, and absent any fundamental news, we intend to review our BUY rating. Key points: · Yesterday's Federal Reserve's adoption of a “neutral bias policy” toward its next action sent CLEC stocks soaring and TGNT shares were at the head of the pack. Yesterday, (June 30,1999), CLECs once again proved their hyper sensitivity to interest rates by surging nearly 10% as the market celebrated better than expected interest rate news. TGNT shares led the rally, advancing 8 points and breezing through our year-end 1999 price target of $58 per share. In talking with the company late in the day, management was unaware of any “fundamental” issues (or rumors) that could justify the day's price action. We suspect the thin float is largely responsible (historically, TGNT shares have tended to reflect investors' enthusiasm and disappointments with the CLEC sector more intensely than its more liquid peer group). · Since April 8, TGNT shares have advanced to the $55 to $60 level three times only to pull back an average of 19% within 5 to 6 days of the peak. This makes sense to us given our valuation criteria. Each time TGNT flirts with the $60 level, its public market discount shrinks to under 30% (a level which has historically signaled full valuation). At that point, value players who attempt to exit the stock drive the price down an average of 19%. If history is a guide we should see some weakness in TGNT shares soon. · Over the past 18 months TGNT shares have “peaked” six times when their public market discount narrowed to the 30% range. The accompanying table “historical valuation metrics” tracks TGNT's public market discount over the past 18 months. As is clear from this table, continued and sustained upward price action of this stock (without a corresponding increase in net asset value estimates) would violate 18 months of extremely consistent trading history. Valuation Our discounted cash flow model (attached) summarizes the key fundamental and valuation assumptions that drive our Net Asset Value for Teligent. The top two thirds of this table reflect our fundamental forecast. The bottom third highlights our valuation assumptions. The mathematics that support our $83 per share (year end 1999) net asset value estimate runs as follows: The net present value of Teligent's free cash flows (EBITDA less capital spending) discounted at 14% for 10 years approximates $886 million. The net present value of Teligent's liquidation value 10 years hence (based on a multiple of 10x cash flow and discounted at 14%) approximates $5.5 billion. The sum of these two estimates ($6.4 billion) reflects Teligent's gross asset value. After subtracting roughly $467 million of net debt, the company's net asset value approximates $5.9 billion or $58 per share. These figures are detailed in the box in the lower left hand of our 10-year DCF model. The box in the lower right hand side of our 10-year DCF model highlights the sensitivity of our target price to different discount rates and terminal multiples. Although a strong case can be made that our 14% discount rate is too steep and our 10x terminal multiple is too light, these metrics historically have successfully identified undervalued CLEC stocks and, as such, we think they represent reasonable (and useful) valuation metrics. TGNT's historical public market discount(s) have mirrored its peer group. The accompanying two charts offer a historical perspective of Teligent's estimated 1998 -1999 year end net asset value(s), its stock price action over this period, and the stock's corresponding public market discount to these estimates at any point during this period. · Top Chart: This chart depicts Teligent' price action from February of 1998 to the present. A line representing year-end 1998 consensus net asset value estimates and our year-end 1999 estimate for the company has been superimposed on this price action. · Bottom Chart: The bottom chart tracks Teligent's public market discount i.e., the spread between the company's stock price and its estimated net asset value, at any given point in time over the past 18 months. · History: During 1998, consensus net asset value estimates for the Company clustered in the $50 per share range. These estimates were raised to the $60 level at the beginning of 1999 (to reflect the inclusion of one more year of positive cash flow and one less year of negative cash flow as the discounting period is shifted one year into the future). After the Company reported 1Q99 results, consensus estimates for year-end 1999 were raised to the mid-$80 level (which mirrors our current $83 estimate). By combining our year-end 1999 net asset value estimate with consensus 1998 and early 1999 estimates, it is possible to track TGNT's public market discount to its “generally accepted” net asset value over the course of the last 18 months. Over this period, the stock's public market discount has “bottomed” in the 55% range five times, and peaked at around 30% six times. Given the stock's volatility (which is largely a function of its limited float), the relatively skinny band within which this discount expands and shrinks is remarkable. · Consistent Trading Pattern. Over the past 18 months, TGNT shares have never traded at less than a 20% public market discount and never traded below a 61% discount. In this regard, the stock trades like dozens of Cable TV, Cellular, PCS and CLEC stocks. Over the same period, TGNT's public market discount has “peaked” in the 25% to 35%-range six times (it has never exceeded this valuation). Five of these six “valuation peaks” occurred at public market discount levels of 28% or greater (the level we're at right now). Once in the last 18 months TGNT's public market discount has narrowed to 25% before expanding. Should the positive impact of the Fed's recent interest rate decision fuel an unprecedented move in TGNT shares – thus narrowing the public market discount to 20%, the upside from the current price level would approximate only 10%. In talking with the company yesterday, we confirmed that there is no news (or rumors) which could support the current valuation level, hence our caution at these levels.