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Technology Stocks : MRV Communications (MRVC) opinions? -- Ignore unavailable to you. Want to Upgrade?

To: Hawaii60 who wrote (25443)	10/14/2000 2:27:43 PM
From: mact	Respond to of 42804

one example is stlw/metha...metha ran up quite well even after the ipo of stlw until the broadbased selloff in sept/oct...the entire photonic sector sold off over the past month, except my beloved cien<gg>...also, u shouldnt compare mrvc to idtc, palm or even metha...mrvc is a holding company now they have at least 10 other co's that they will eventually spinoff...a big difference imo. OT...we need to watch oplk and furakara's spinoff optical communication very closely...this should gives us a clue to what lmne will do in the after mkt....optical comm competes directly with lmne. mact

To: Hawaii60 who wrote (25443)	10/14/2000 2:33:08 PM
From: James Calladine	Read Replies (1) \| Respond to of 42804

STRATEGY: So, from a simplistic point of view, is it a reasonable strategy (if presently long MRVC) to?: -- short whatever portion of IPO spinoff's you are prepared to part with (at the time you think they have hit their peak) -- do the same thing with MRVC -- cover the IPO shorts with IPO shares as received and the MRVC short with present long position -- do not cover the MRVC short until the required IPO shares have been received Can somebody critique this approach and (even better) suggest something superior? Is there an even nicer play involving the convertible debentures? Best wishes, Jim

To: Hawaii60 who wrote (25443)	10/14/2000 7:07:12 PM
From: Duffeck	Read Replies (1) \| Respond to of 42804

Hawaii: Take a look at HWP/A example quote.yahoo.com quote.yahoo.com A IPO was on November 18, 1999. The distribution formula for HWP/A was .3814 shares of A for each share of HWP. So in this case the formula becomes. HWP= .3814A + HWP(EE) where EE means Everything Else. Now we can solve for HP(EE) using the values determined by the market at the close on November 18th 1999. HWP closed at 94.3125 and A at 44. Therefore: HWP(EE)= 94.3125 - .381444 = 77.53 Both A and HWP took off after the IPO. A peaked at 159 on March 6, 2000 an increase of 115 from the close on the day of the IPO. Lets see what we get for a value for HWP using our formula. HWP= .3814A + HWP(EE) In this example I will assume HWP(EE) remained constant at 77.53. HWP= .3814159 + 77.53 = 138 Now on that day HWP actually closed at 146. So between 18 November 1999 and 6 March 2000 our simple arbitrage model predicts that all but 8 the increase of HWP since the IPO day was driven by the increase of the spun off entity A. The additional 8 was attributable to an increase in HWP(EE) from 77.53 to 85.53. Now as we all know today 13Oct2000 the value of A has decreased to 44 and HWP(EE) is 90.625. The sum of both is 134.625. A year ago HWP including all of A was 83.25. The increase in one year is 61.2%. Now what is the point of all this? As we have seen the arbitrage formula worked fairly accurately predicting the increasing value of the mother company HWP based on the increasing value of the spun off entity A after the IPO date. It is impossible to forecast the value of HWP if the A IPO had not happened. However, as we have seen the value of the two companies today is 61% higher than a year ago. duff