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

To: Peter V who wrote (12080)	11/12/1999 10:41:00 AM
From: kumqwatt	Respond to of 18998

Eric Green of Penn Capital Management (609-354-1533), provides the following stock idea on Microcell (MICTF 24 3/8). Below is the write-up. Microcell is a Canadian GSM (Global System for Mobile communication) carrier. Eric Green of Penn Capital Management particularly finds the company's stock attractive because U.S. wireless companies have gotten "so expensive." Investors are looking at foreign wireless companies such as Microcell. "The Canadian market is one of the least-expensive markets for cellular phone usage. The penetration rates are very low and there is a dramatic opportunity to increase rates," says Eric. Eric finds Microcell a compelling value. Orange plc was recently acquired for $250 per pop (pop is defined as population equivalent in a covered service territory, i.e. one person = one pop), while VoiceStream Wireless trades at $190 per pop. Microcell only trades at less than $90 per pop. Green explains that one reason why Microcell trades at such a significant discount to its peers is because a foreign company cannot own more than 50 percent of a Canadian telecom company. He believes those restrictions will ultimately be lifted and that Microcell will eventually be acquired. "When these ownership restrictions are lifted the difference in the per-pop valuation of 90 and the 250 will close dramatically," says Eric. Microcell owns approximately 20 percent of a company called Saraide.com, which is a private company Eric expects Goldman Sachs will take public next year. Green mentions that Saraide.com is similar to Phone.com (with a market cap in excess of $8 billion) and is a wireless software company that allows Internet access over a telephone or wireless ISP connection. He thinks that when Saraide.com starts trading, each share of Microcell could have close to $8-10 worth of Saraide.com embedded into it. In addition, Microcell's venture capital subsidiary, GSM Capital, has several other attractive investments in the wireless communications industry. Eric adds that Microcell is the only Canadian company to operate a GSM-based network. He thinks the company's shares could hit the mid-30s sometime within the next 12 to 18 months. There is a thread that discusses MICTF on SI.