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Strategies & Market Trends : The Amateur Traders Corner -- Ignore unavailable to you. Want to Upgrade?

To: horsegirl48 who wrote (6584)	2/28/2001 9:09:40 AM
From: thegreatkazoo	Respond to of 19633

Watch out for KREM this month. There could be some odd movements in the stock, due to the 2 for 1 split that takes effect March 20. Kazoo

To: horsegirl48 who wrote (6584)	2/28/2001 9:10:23 AM
From: Fundamentls	Respond to of 19633

I think KREM is a good short here, but would allocate very carefully because it is subject to a lot of manipulation. I doubt it will see much north of 80 before it comes down. Having said that, I have been upside down in my KREM short for longer than anything I recall. My own fault for not reading the S-1 carefully enough; the terms of the lockup were quite unusual and weren't accurately reflected in the many online resources. On valuation KREM is a no-brainer short, but of course valuation alone is a dumb reason to short. IMO the price has held up for the last year because of a concerted and possibly illegal manipulation by insiders (this is my opinion, and I have some good evidence to support it, but I don't claim to meet any legal standard of proof on my evidence alone). KREM's CEO led everyone to believe that the lockup ended in April 2001, despite the fact that the S-1 said the lockup was only 6 months. He said this quite precisely in the conference call back around the September; I have the transcript. Granted the Rule 144 one-year holding period restrictions still would applied after the six months and would have prevented anyone from selling without a registration statement being filed first. But there was absolutely nothing to prevent them from filing a registration statement at any time after six months from the IPO, at which point any or all shares could be made freely tradable. This misstatement by the CEO was pointed out to them and a correction requested, but none was forthcoming. And surprise of surpises, they DID file registration statement last month that freed up a bundle of shares that have no doubt now been sold, after the CEO quite clearly led people to believe that couldn't happen. That's even more convenient now because the near-insiders (non officer/director/10%ers) can sell without telling the rest of us, no 144s or 4s required. So we can have a dumpola by friends and families while it looks to all the world like no insiders are selling. Now come April all the remaining (still unregistered) insider shares become freely tradable, subject only to the 144 volume limits and reporting requirements. (The reason they weren't tradable before then is unusual: KREM did a reorganization into a new corporate entity at the time of the IPO, which meant that all KREM stock was issued on that date; Rule 144 has a one-year holding period before any securities can be sold without a registration statement. That's not normally an issue with most pre-IPO stock because most holders will have already held it for a year; when the lockup ends, most of the insider stock becomes tradable under rule 144 - in this case it did so only after a year.) KREM's fair value is probably no more than $20-$30 per share. It may not reach that any time soon because I think a lot of the holders are J6P-types who figure a good donut must make a good investment and are still congratulating themselves on their investment savvy as evidenced by the run to over $100. But undoubtedly once the floodgates open and the insiders can sell, there will be downward pressure. I plan to cover somewhere in the 40's - higher than my initial entry point, but well below my average. It may take until summer or even fall to get to the 40s, but I'm patient. While the float remains tight, the potential for a short squeeze remains with us, and KREM can be a real alligator. If you allocate, add on squeezes, and allow for the possibility that it could still go to 120 before it crashes completely, and if you have 6-9 months to wait it out, KREM could be a very profitable short. JMHO. Good luck. KREM is very difficult to find a borrow for. That's usually a sign of a good short - but not necessarily of an opportunity to make a quick buck. With patience and allocation, there's a good chance to make a nice return with relatively low risk. Regards, Fund