All right, here's my first nomination...
messages.yahoo.com
CNC buy recommendation
by: teknalysis 8/27/00 8:10 pm
Msg: 68598 of 68621
I have recommended CNC on my RagingBull.com Personal Board--Tek's World, a board for position traders. A partial text follows:
To all Tek’s World members;
On 6/27 I bought CNC buy at $6 1/8. It eventually ran to an intraday high of $11 3/4 on 7/5. The recommendation was based on Irwin Jacobs and associates buying over $100 million worth of CNC common stock--Jacobs said CNC represents the greatest profit opportunity he has seen in his 58 years and the pending announcement of former GE Capital exec Gary Wendt as the new CNC CEO. Mr. Wendt has become the new CEO and has brought at least 6 GE Capital veterans with him as his A-Team.
I am now recommending CNC, one of the 10 largest insurance companies again. It has based out in the low to mid $7’s, and closed at 7 3/8 on Friday. The technical indicators have been bullishly reset. Of special interest are the Bollinger Bands, which are showing the tightest contraction since July 1996.
The issue creating the new buying opportunity in CNC is the various nearing deadlines for various amounts of debt repayment.
CNC has assured shareholders that non-strategic assets will be sold to meet some of the debt repayment. Until such assets are sold, CNC has assured shareholders that the looming debt payment deadlines will be extended and/or the debt refinanced.
Anti-CNC forces, such as Barron’s, CNBC, and various newspapers in MN and IN, etc have been painting a dismal picture for the above-mentioned restructuring. Short sellers have been working overtime on message boards to further frighten longs. Debt reporting agencies such as Moody’s, S&P, etc have lowered the company’s debt ratings. Major brokerages have lowered their outlook on the stock.
This is called “Bash and Stash”. It is the opposite of “Pump and Dump”. In the Bash and Stash, the goal is for the Street to bash the target company and stash away the stock at low prices. When the “problem situation” of the target company is resolved, the stock goes up and the Street makes a killing.
Because of the large number of insurance and mutual fund policyholders, the general size of the company and its relative importance in its industry, it is very unlikely that the debt will not be restructured prior to asset sales. Also, the banks, brokerages and other creditors earn too many millions per year in interest, consulting fees and preferred dividends not too save the patient.
Here are the share data (in round number) numbers for CNC:
Issued 325,000,000 shares
Insiders 72,000,000 shares
Other large holders 145,000,000 shares
Float 108,000,000 shares
Short interest 66,000,000 shares
CNC has the 2ND HIGHEST short interest of any NYSE listed stock!
To battle the shorts, Irwin Jacobs has spent $500,000 on full-page ads in the WSJ and NY Times, as well as appearing on CNBC on 8/25/00.
The purpose of these ads is to educate the long shareholders about the damage the shorts are doing and to suggest a solution. The solution offered is to notify their brokers in writing not to let their shares be loaned out to shorts
Jacobs unprecedented campaign is helping start the short squeeze that will erupt when the debt restructure announcement is made.
Jacobs is in good company. Other major shareholders are Alex Brown, Barclays, Pimco, Harvard College, Equinox Capital, State Street Corp, Federated Investors, Thomas Lee Partners, National Fidelity Life, Pioneer II fund, Federated American, Hartford Capital, Safeco, Vanguard, Morgan Stanley Dean Witter, Aetna, Gabelli and Morningstar.
For more details on CNC, read the CNC board at Raging Bull. Start with post number 4798 and it’s various links. Also read all other posts by ta_56, as well as greeedyboy, and paulthebigfinn.
I recommend CNC as a strong buy. |
