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Strategies & Market Trends : The GUMMMy Bear Squad touting Gum Tech (NASDAQ: GUMM) -- Ignore unavailable to you. Want to Upgrade?

To: Mad2 who wrote (190)	5/20/2000 8:11:00 PM
From: Mike M	Read Replies (1) \| Respond to of 207

Mad that insider sales stuff is a real red herring... Many say that CSCO is the company of the decade. Their quarterly revenues were up 55%...They are on everybody's buy list...etc ad nauseum. A look at CSCO's insider transactions makes GUMM management look like they are in a buying frenzy. biz.yahoo.com Folks sell for their very own personal reason. You are too smart to try to derive something out of that. It still gets back to company execution. You see the cup half empty. I see it half full. If sales can continue to grow as they have over the past several years, earnings will follow and the stock is cheap not expensive. If they don't you are right. I bet you are wrong.

To: Mad2 who wrote (190)	5/21/2000 8:09:00 AM
From: DanZ	Read Replies (2) \| Respond to of 207

I got a laugh out of your post as well. The data that I posted came from Market Guide and I believe that it is accurate. research.web.aol.com Sales in the last twelve months: Q2 99: $1,919,141 (+58% year to year) Q3 99: $2,268,782 (+76% year to year) Q4 99: $8,866,545 (+431% year to year) Q1 00: $4,016,011 (+64% year to year) TTM Sales: $17,070,479 (+158% year to year) Market capitalization: $12 per share * 8.5 million shares = about $102,000,000 Price to sales = 102m/17m = 5.98 Even using your data, the stock is still less expensive on a relative basis than the S&P 500 and the sector. You have to look at growth in sales to make a rationale judgment about the price to sales because a company that grew sales 51% per year over the last five years, 194% in the last year, and is expected to continue growing sales, deserves a higher price to sales than a company that has only grown sales 20% over the same period. I believe that normalizing the data in the manner of my last post is fair and reasonable and indicates that GUMM is undervalued on that basis. Insider sales have nothing to do with the value of a company although I agree that outright insider sales might indicate that insiders believe that their stock is overvalued. There is a big difference between outright insider sales and option related insider sales, and your inability to recognize this is just one more example of how you view everything about Gum Tech as negative. Countless examples prove that option related selling is a very poor indicator of future stock prices and fundamentals. In many cases, stocks rallied for sustained periods after insiders exercised options and sold stock. The reason is obvious. In some cases, options are part of an insider's salary, so they have to sell some stock to get "paid". In other cases, insiders don't have enough cash to pay the exercise cost or their tax liability, so they have to sell to settle their debt. Bashers on the RXSD thread noted that Chairman Carl Desantis sold hundreds of thousands of shares of stock over the last year and how this must spell doom for the stock. Mr. Desantis most recently sold nearly 300,000 shares of stock at 10 1/2 in December 99. Guess what? Rexall Sundown was just bought out for $24 per share, only five months after the Chairman's latest sale. And you expect anyone to worry about Gary's option related sales when he owed about $1 million in exercise costs and taxes against a salary of $150,000? The bottom line is that Gary Kehoe, Bill Hemelt, and Brown Russell have all increased the number of shares that they own in Gum Tech over the last year. Bruce Jorgenson recently retired and understandably wants to raise some cash. In the final analysis, this stock is undervalued and will most likely go up if sales continue to increase at the rate of 50% per year. If sales flatten, the stock probably won't do much but the downside is limited. If sales decline, the stock will most likely go down. You haven't made a reasonable case for sales declining and you completely ignore nicotine gum and dental gum in your "analysis". Do you think that they won't sell any of these products? Geez, Swedish Match is a billion dollar market cap company and the Chairman/President mentioned their joint venture with Gum Tech by name in his speech to Shareholders in April. In fact, Gum Tech was the only company that he mentioned as part of their strategy for future growth. Wouldn't you interpret this as Swedish Match being damn serious about nicotine gum? Swedish Match has the capital, marketing skills, distribution, and desire to make their nicotine gum joint venture with Gum Tech successful, and you somehow think that sales will decline? Gum Tech said that they are working with a large consumer products company on dental gum. The only two that come to mind are Colgate and Proctor & Gamble (Crest). Do you think that sales will decline with a mammoth like this selling dental gum? Your arguments are weak, and the fact that you see everything about this company as negative make me wary of your motives and opinions.