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To: XBrit who wrote (28289)	10/14/2000 9:20:19 AM
From: rolatzi	Read Replies (1) \| Respond to of 436258

Re Barrons: article on shorts excerpt as follows: Q: Talk about some of your other shorts, would you? A: I'm short about 30-40 names. I have recently been shorting General Electric. GE is everybody's safe haven. It sells at 40 times next year's earnings. At least half the earnings come from the finance side of the business. That's an enormous multiple compared with Citigroup or other financial-services companies. If you put a multiple of 20 times on the aircraft and powerplant businesses, the finance business could be selling at 60-70 times earnings. Enormous. Welch is a great manager, but he is leaving. I have a feeling when he leaves, stuff will come out that ain't going to be pretty. Meanwhile, it has such an enormous valuation that the risk of losing a lot of money in it is pretty small. Q: What else? A: I am short Goldman Sachs, Morgan Stanley Dean Witter, Citigroup, Exodus Communications and Walt Disney. Q: Disney? Your former colleague at Capital Research, Gordon Crawford, just showed up in Vanity Fair wearing Mickey Mouse ears and surrounded by Disney paraphernalia. A: It is a valuation question again. Disney benefited greatly from this Who Wants to Be a Millionaire? program. Other than that, its business is not a great growth business. Theme parks are a mature business. The stores are a disaster. The movies are up and down. They are riding on the TV stuff, but I just don't see the upside. The stock is up from the mid-20s to the high 30s. The risk of it running away from you on the upside is low. Q: What's your case against Exodus, just valuation, or are there problems with their business? A: Exodus probably has enough plant in place to generate, say, $1.5 billion in revenues, something like that. The market cap is around $20 billion, about 15 times revenues. The growth in their business depends upon the growth in the number of Websites and servers and storage devices and what not. If you think this market, which has been growing in a great whoosh! for two or three years, is going to slow down, then it is selling at a very high valuation in relation to the size of the company. They are extremely highly leveraged. They have 11% debt on the balance sheet. They are losing money. There are competitors. It should be inherently a very competitive business. It is a real-estate business, to a large extent. So it's capital-intensive and very competitive. And they are paying people with stock options. Who wants a stock like that? ------------------------- rolatzi