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At the start of the year, 1000 sh. ubid would have cost $145,000, while 1000sh. of SFE $29,000. Now SFE is worth $64,750, while 1,000 sh. of UBID is worth $22,650. The dangers of being long and wrong pure internet stocks is now apparent to even new era- to the moon, speculators. How does SFE compare to the "quality" net stocks? On the year, of AOL, YHOO, AMZN, and CMGI, only CMGI is still ahead of SFE. In the past month, SFE is down about 3 %, while the others including CMGI are down 19% to 24%. The stochastic sell reported in the July 20 post [indicating a possible juncture to sell cov. calls on TLAB and SFE], has worked well. The covered calls have declined to about 1/3 of the value on that date. SFE itself has done fairly well. The sell came in at around $70, and SFE is now getting oversold even though the stock is only down to $64 3/4, [even touching a $67 high today. Todays high put it just a point or so away from resistance around $68, where the 50 day MA resides.] Volume during the sell off has been very subdued, a positive. I think ICGE and the road show highlighting it and SFE's involvement is a factor in keeping the decline moderate. Regarding ICGE, trading in it should be interesting. If, as SL has reported, the float is only 5M or 6M sh., it should be plenty volatile. The total sh. outstanding of 125M is important from a valuation standpoint. It is likely that the stock will substantially exceed its sustainable price point early on because it is the best way to get in on B to B, and combined with such a low float, it could fly. From whatever the early high is, there should be ample opportunity to pick it up quite a bit cheaper with patience. Just a guess, only that, but IMO, it should spend a fair amount of time in the $30 to $40 range, which would be a market cap. of $3.7 to $5B. If it does trade there [plus a couple bucks NAV for USIT] it would give SFE a NAV of around $47 [at $30 ICGE] to $50 NAV, [using $40 for ICGE]. If ICGE trades over $50, and SFE over $70 to $75, I would view either situation as not sustainable under current market conditions. This really is a rather unique situation, so who knows, these are just best guesses. Since ICGE has a low float, and it is all about perceptions of far in the future value, ICGE should be a great trading stock as emotions combined with low float should make it highly volatile. [Bright future it has, but I would put a personal cheap valuation on it closer to $2B, or $16 a share, that aside, my job is to figure out what the market thinks is cheap and expensive. To that, I'd guess that under $30 a buy, and over $50 a sell.] Sometimes, we forget that over the medium term, the market direction over-all is the prime determinate of what our stocks will do. Problem is, very few can consistently predict that. I won't try, but in general, the long bond at 6.12% is a problem, if it goes over 6.20 to 6.25% it becomes a much bigger problem. Market peaks, often seem to occur in the July/Aug. time frame. Sept., is one of the hardest months to register gains, and Oct., can be well, volatile, and not always on the upside. Good earnings are past, and the economic numbers that the market seems to be focusing on seem to be coming in with early signs of problems. The public still seems far to complacent. Last fall, the rubber band [market] was stretched way to far on the downside, and this spring, the rubber band was stretched to far to the upside. Right now it appears not to be stretched in either direction. [Except for long term stretched to the upside]. So, it seems a good time to be somewhat conservative, and wait for the rubber band to get stretched again in either direction, before being aggressive. There are always short or long opportunities in any market, but it is much harder now. The real opportunities will come when the market tips its hand. For now, SFE is outperforming its peer group [or at least the somewhat arbitrary one I compared to], ICGE is almost here, and Bto B internet commerce is hot. Thankful for these positives. Mike |
