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Strategies & Market Trends : Mr. Pink's Picks: selected event-driven value investments -- Ignore unavailable to you. Want to Upgrade?

To: lindend who wrote (11508)	9/15/1999 6:01:00 PM
From: Mr. Pink	Respond to of 18998

a turd indeed. rumors about that the reason the company pulled its secondary offering is more bad news in the offing and Merrill was unwilling to do the deal....coincidently, Merrill was on the offer side all day. a leopard doesn't change its spots and once a crim, always a crim. mr. P$nk

To: lindend who wrote (11508)	9/16/1999 1:33:00 AM
From: Mad2	Read Replies (1) \| Respond to of 18998

Re:PLCE As Mr. P$nk indicates this outfit may have lost site of the interests of the public shareholder. Their behavior certianly shows little regard for the non-insider holder of equity. March to June insiders sold a butt load of stock. Didn't look into managment/employee stock option/purchace programs but noticed that shares outstanding increased over the past year by 350,000 shares at a average purchace price of $6.10 each, many of which were promptly sold in the range of $40-45 each. Interestingly this amount equals roughly 50% of PLCE's net income projected for this year. On top of this insiders had hoped to sell an additional 3 milion shares that was canceled " due to the decline in the companies share price", boy are those guy's greedy they want to sell at the top and not even give a nickle to the poor slob who buys their stock. Fact is the company is running out of cash and uped their line of credit to 50 milsky in the quarter. I think ML got scared that if they peddled insider shares of a obviously fully valued company (read that can only go down) their good clients would get PO'ed, probably ok in a raging bull market, but now they have to try and avoid peddling junk deals. If this company is to sustain their 30% anual growth target (that Merrills price target of the high 40's was predicated upon, or 30 times next years earnings) PLCE will need a lot of money. here's a simple valuation compared to a very similar niche retailer(actual figures based on todays close) that I idenitify as Company A(who hasn't had to turn on the O2 yet, whereas the guys at PLCE got altitude sickness). Company A PLCE Price/Book 1.04 7.5 Price/Sales 0.58 2 Price/Earnings 17 31.3 Profit Margin 5.8 7.9 Shares 20.5mil 25.2 mil Float 6.1mil 5.5mil Short shares 378thous 2.4mil analyst ratings 1.67 1.44 # analsyts 5 8 Finally their 10 Q issued today puzzled me as it related to their new distribution center, in that they have agreed to lease 204,000 for 6.86/ft (which where I'm from gets you nice diggs), on top of that they are going to spend 13 mil renovating the place (that's 64 bucks a foot) a huge sum of money. Additionally they mention a 5mil wse managment system to boot. There are some other problems developing here (weakening dollar, cost of funds to finance growth, etc...) With out going through the DCF calculations (and the assumptions that go into it) etc, I get the sense that due to a free spending attitude, dilution and inability to sell a secondary sends the anticipated 30% growth in eps is out the window. Granted the secondary wouldn't have helped and probably would have hurt, however as MP points out ML was on the offer all day meaning when they decided they couldn't (or wouldn't) sell the deal they figured they may as well unload what they have for the same reason. Fact is pigs get fat and hogs get slaughtered. This one flew high and far, for a while and now its out of gas. Time for a pig roast. Best Regards, Mad2 BTW anyone ever research sell side analsyts recomendations, I wonder if they aren't a contrarian indicator ;?>