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Biotech / Medical : GUMM - Eliminate the Common Cold -- Ignore unavailable to you. Want to Upgrade?

To: out_of_the_loop who wrote (723)	7/28/1999 1:46:00 AM
From: Mad2	Read Replies (2) \| Respond to of 5582

Howard, I have always enjoyed our discource, thus I don't consider your response a intrusion. Concerning the issue of momentum, it is when a stock trades on expectations of the trading activity independent of fundamental valuation. To a day trader its based upon trading and technical activity of a stock, sometimes triggered by a internal/external event. Short term many make a living trading on earnings expectations 4-6 weeks out, or sell conversly after a earnings release. In the case of GUMM the case for buying it now or perhaps holding it if your in, is based upon the the expected demand and thus higher price of GUMM to be triggered by 1) revenue of ZICAM and the NEJM expected publication as well as 2)the mentioned issues surrounding control of shares in GUMM and efforts to restrict their borrow (stock manupulation scheme) These are potential events that can in fact result in the shares of GUMM to rise from the momentum in demand. This does not imply that GUMM is a good investiment. Given that GUMM is grossly overvalued according to fundamental analysis means much of the positive potential for GUMM is allready priced in. Price to book - 19.27 Price to sales - 13.23 Cash per share - $.34 without citadal's 6 mil or $1.16 with it. Book Value 4.7 mil debit - 2.7 mil before Citadal's 6.o mil, 8.7 afterwards Debit/equity - with Citadal's financing a highly leveraged 3.2 Earnings - Here to fore negative. Thus if you bought a share tommrow at today's close of 12 5/8 your getting $.66 of book value and zero earnings. On top of this they have 60 employees, for a company with a market cap of 90 mil each employee represents 1.5 mil of market capitalization. compare that to PG who's market cap per employee is 1.06 mil and JNJ who's market cap per employee is 1.39 mil. These are proven companies with economies of scale, proven distribution, marketing and products that make money and whose assets are not nearly as high priced and their business is proven. Bottom line is GUMM is a story of ZICAM, Gunn Allen and stock manipulation (alleged, however the story on stock manipulation comes from GUMM longs). The stock price is based upon expectations that GUMM will support even higher valuations. Do I believe they will? No, because I believe the leading peer companies that do similar things are both proven and expert at it. Can GUMM support higher valuations......well theoretically it is possible (as most everything is possible). Will GUMM support higher valuations?......Highly unlikely. Thus my comment to Bo that GUMM as a risky momentum play that needs be watched closly so you can get to the exits if need be. That was meant to be a well intentioned warning to "part time investors" not to be lulled into potentially a secure feeling based on PR on ZICAM etc and to pay attention to financials and other signs that reality might set in. Howard, as I've said before there is only one way for me to play GUMM and that is on the short side as I want both momentum and fundamentals on the my side when money is on the line. It doesn't suprise me the movement in GUMM and I wouldn't be suprised in some continued upside. None the less I'm not long GUMM because I want fundamentals to form a floor of support for my investiment. That doesn't exist with GUMM. sorry to be so long winded. Best Regards, Mad2