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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: TimbaBear who wrote (11927)	1/21/2001 4:06:58 PM
From: Don Earl	Respond to of 78659

Timba, As a rule I tend to be in favor of secondary offerings. I'd sure rather see a company do a secondary near a market top than sell cheap shares near the bottom because they got in trouble. It's also a far superior way to raise cash than to issue preferred or debt. At least for holders of common. The secondary raises book value for everyone and produces interest income as opposed to interest expense. There are a lot of companies that went public near the market top in the last few years that should show up on net net screens right now because they were able to hang onto their cash. In the case of VIAN, they've managed to improve the cash position by around $20 million above what they received in the offerings over the last year and a half. MRCH is one I was looking at in the sector mainly because of the price, but I had to keep closing one eye to see anything good about it. In the case of MRCH, they burned cash like there was no bottom to the bucket to expand the company and found themselves trying to climb a step that wasn't there. The result was a private placement of an unholy amount of stock at rock bottom and it still wasn't enough to dig themselves out of liquidity problems. "In light of the recent major cutbacks in internet advertising that have gotten so much publicity, wouldn't it be reasonable to assume that that means cut-backs in plans to use the internet commercially have also been scaled back?" As I mentioned in a recent post, I tend to target out of favor sectors. The biggest percentage gains come from changes in market sentiment. When Reuters "hates" a sector so bad they devote a major part of their resources to spread FUD, that's the place I usually go to look for bargains. Look for the slant in those kind of articles rather than take anecdotal proofs, surveys without any kind of statistical validity, and obscure quotes from obscure analysts at face value. Take out the smoke and mirrors and you have something along the lines of: "Someone I know in the business went broke. I asked three of my neighbors about it and 66% of them said the situation is bad. 'Very, very bad.', said Jon Barleycorn, a soybean farmer with three acres under cultivation in Nantucket." The actual semantic content of those sort of articles becomes virtually sense free. It's about like calling October the beginning of an impending ice age rather than as part of a normal cycle known as winter. No doubt the consulting market is tight right now. My overall impression is that it will loosen up in the second half. Note that I said "my impression". My impression is no substitute for your own research. VIAN is on my wish list in the high 2's, low 3's provided I like the flavor of the next CC. I don't own the stock at present, may not see my price target show up and could decide against it even if the price does come into range. Since someone else mentioned it, I thought it might be an interesting one to kick around.