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Strategies & Market Trends : Due Diligence - How to Investigate a Stock -- Ignore unavailable to you. Want to Upgrade?

To: Bob Rudd who wrote (683)	8/18/1999 3:36:00 PM
From: The Other Analyst	Read Replies (2) \| Respond to of 752

Interest rates - depending on sensitivity [NO. CATALYST SHOULD BE RESERVED FOR MORE COMPANY SPECIFIC STUFF] Exceeds expectations - Earnings better than expected News better than expected * Negative development doesn't occur or has less impact [BY THE WAY, JUST BECAUSE EPS EXCEED PUBLISHED ESTIMATES DOE NOT MEAN IT IS A SURPRISE THAT LIFTS THE STOCK. SOME COMPANIES MAKE IT A PRACTICE TO GUIDE ANALYSTS DOWN SO THEY CAN BEAT THE NUMBERS. IT BACKFIRES THOUGH. THEN EVERYONE BUILDS THAT INTO THEIR EXPECTATIONS.] Lower cost factor Airlines get lower oil prices Airlines get lower selling costs from net Higher price realizations $ lower reduces foreign competitive prices Foreign demand increases due to recovery Higher demand - more housing due to lower rates drives drywall demand above capacity [GOOD EXAMPLE. THIS ACTUALLY HAPPENED TO GEORGIA-PACIFIC, BUT THE REAL CAUSE WAS NOT THE RATES SO MUCH AS STRUCURAL CHANGES IN THE GYPSUM INDUSTRY OVER A NUYMBER OF YEARS. * Hot product, advertising stimulates demand Competitor dies or is bought [Helps those not purchasing CompUSA buys Computer city, hurting itself but helping BBY Of Depot etc Regulatory Change PPS whacked SNF's What if it partially reversed? Takeover possibilities Lessened by defensive measures, poison pill, or concentrated ownership Restructuring - Spin-off divisions or tracking stock makes value visable Asset sale - undervalued asset New patent, discovery Entremed - High visibility high potential, despite low probability [TO WHAT DO YOUR REFER ABOUT ENTREMED? THE DRAMATIC IPO RUN UP OR THE PLUNGE WHEN TESTS LATER FAILED?] *Biotech - Move up to phase x trials improving approval probability Web strategy - Co announces e-commerce strategy and stock soars Recognition of Option value Technical signals - breakout momentum New management Seeking additions to list and comments about catalysts EXCUSE THE ALL CAPS. I'M NOT REALLY YELLING HERE. JUST CUT AND PASTED YOUR POST INTO MY WINDOW SO I COULD REACT TO YOUR MESSAGE AND NEEDED A WAY TO DISTINGUISH. I THINK THE TERM "CATALYST" IS BEST RESERVED FOR SOMETHING MORE SPECIFIC THAN ANY CHANGE THAT MOVES A STOCK UP OR DOWN. TO ME IT IMPLIES AN EVENT THAT WILL TRIGGER RECOGNITION OF AN UNDERLYING REALITY. THE INVESTOR OR ANALYST SEES THE SITUATION. E.G. THAT CHANGES INVOLVING US GYPSUM AND NATIONAL GYPSUM HAVE REDUCED CAPACITY. SO GYPSUM CAPACITY IS MORE VALUABLE. BUT NO ONE NOTICES IMPLICATIONS FOR GP. THEN ALONG COMES A CATALYST, WHICH IS HOUSING STARTS STRONG ENOUGH TO TRIGGER SHARP PRICE INCREASES. There, the caps are off. So that leads to favorable earnings surprises. To restate, a catalyst is not a genuine surprise. It is a focusing of attention on a situation in a way that triggers broader investor recognition. agree?