To: Rande Is who wrote (22041 ) 3/9/2000 3:03:00 PM From: Steven Finkel Read Replies (1) | Respond to of 57584
Great job Rande! Your work has certainly benefitted MANY on the thread. I just wanted to re-visit the RDOC/RDOCW issue, for a learning experience for the thread: RDOC today is up 6.5% RDOCW today is up 35.53% and continues to trade at a healthy multiple to its current "intrinsic" value. I bring it up NOT to say, hey look I was right, because that benefits NO ONE. Instead, I simply hope people recognize the unique leverage that RDOCW affords the investor, and it is my opinion that this leverage is what allows the warrant to trade ahead of itself. What do I mean? Follow this: RDOC was identified by you (Rande) some time ago and has already returned roughly 35% to those who were fortunate enough to buy the stock when you included it in the ultra aggressive port (or before). But follow my reasoning here: you (rande) don't put stocks in your ultra aggressive port so that they can return only 35% for the year. 350% tends to be more of your target. All that aside, when you couple the fact that RDOC has dramatically inreased their sales, has earnings coming out soon, has a one year rough target of 6-8 given by yourself, and clearly is attracting some momentum play, I say to myself, hmmm..... IF RDOC hits 7, then the warrant's INTRINSIC value is 7*2= 14-5.74= 8.25, which was well ahead of its price of 2 just two days ago. SO: Even though the warrant was trading "ahead" of itself, and still is, I decided that it was a healthy risk that at some point RDOC would hit 7, which would return 133% on the common, or 400% on the warrant. Again, it is the unique terms of this warrant that makes it so powerfull. I hope that some have taken advantage of this discussion over the past few days. Being fair, I will add that warrants often trade at lower volumes and have less liquidity. They often also carry larger spreads which can be frustrating.