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Technology Stocks : Disk Drive Sector Discussion Forum -- Ignore unavailable to you. Want to Upgrade?

To: Sarmad Y. Hermiz who wrote (7691)	1/4/2000 4:22:00 PM
From: Mark Adams	Read Replies (1) \| Respond to of 9256

Sarmad, One thought that occurred to me following that post is that book value may not be negative if assets are marked to market. Usually I think of book value being inflated by goodwill, but the inverse is also true sometimes. 1- short. Yes there was 10 million shares short from a month ago. If the buying this year is due to short cover, then yesterday and today would totally satisfy that. So if it goes up again tomorrow, we'll know it is fresh buying. Well, less than 10% of the trading could be short covering to stimulate the move. SOES bandits and day traders buying and selling the same shares to scalp 'teenies' pushes volume numbers higher. Not all shorts would cover at the same time, as they short for different reasons. Those who purchased convertable debt/preferred and shorted the common to capture interest may not ever cover. Those who shorted as a sector play when WDC traded at $30, $25, $15 may cover because they see better opportunities in todays markets. 2- Institutions. There is no one in the market more moronic than institutions. They simply try to create and flow with momentum. The best time to buy anything is when it is under-owned by institutions. We have an advantage over institutions in that we can enter/leave a stock without moving the market. I'm a strong believer in looking for advantages that our smaller size offers over our full time, well financed brethern have. Agility, and sometimes sector specific knowledge must be leveraged to our advantage if we ever want to out gun the big boys. Huge mutual funds have to accumulate/distribute stock over longer periods of time to minimize impacting the market, barring the occasional stampede for the exits on bad news. When you see a gradual divesture by the big money, it may pay to sit up and take notice. I've only been looking at this new info provided by yahoo recently, but 30% over a quarter seems a huge divesture. Usually a growth fund sells to a value fund, I believe resulting in no net change in institutional holdings. 3- Financial position. Yes WDC is in a woeful state. In the past 3 months they private-placed 4 million shares at $3.6 per share. You might think some of those people should be selling now (at 30% profit in a few days). Yet that easy float is not pressuring the stock. Does put some overhead resistance in place, altering the risk/reward picture. I'd forgotten about this; thanks for pointing it out. Lst time I looked, WDC had a few hundred million in cash. I don't know whether they burned it by now or not. My guess is their revenue has been strong in the past quarter, so maybe their financial state is less bad. Their current ratio looks to be just under 1, which suggests they may need to visit the trough again soon. 10Q filed in November says 185 million in cash, but really need to see a balance sheet to measure that against current liabilities. One final note. Grant that WDC is a special case, why is HDD holding firm today in the face of the biggest Tech drop in history ? I think that the weak hands have sold, and it doesn't take much buying to support these stocks. Unless unusual volume accompanies a decent sized price change, I don't pay too much attention. I hold HDD, but it isn't even on the radar screen today whereas WDC, moving up on strong volume suggests something positive on the horizon. I hope.. I continue to hold, understanding there is risk in WDC. The people running the company are certainly smarter and more capable at executing their business plan than I, and I'm still willing to extend them time to bring their plans to fruition. Good luck with your investments.