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Technology Stocks : AremisSoft Corporation (AREM) -- Ignore unavailable to you. Want to Upgrade?

To: Dale Baker who wrote (339)	6/11/2001 7:46:13 AM
From: Bob Rudd	Read Replies (2) \| Respond to of 683

For the shorts to be right AREM would have to be a serious FRAUD along the lines of Cendant's CUC division, LHSP and such. With the exception of penny stocks, what are the base rate odds on a comprehensive, conspiracy to commit fraud? Studies have shown way less than 1%. But the high visibility of the one's that occur [and the higher share of frauds in the penny stock arena] causes shorts to over estimate the probability of fraud substantially, IMO. It's like a highly visible air crash causes people to be more concerned about air safety than the actual crash stats would indicate. It's a perception/decision error. A bit of disagreement on the use of the word 'contract' to describe a complex agreement that will [with 80+% probability - all forward contracts have risk] result in estimated revenues of 37.5mm [<5% expected revenues over the period] with the contingencies of the contract clearly spelled out in filings, doesn't indicate fraud. The difficulty of getting a clear picture of an operation on another continent causes a NYT reporter to say he can't find all the subsidiaries - Is this fraud by AREM or reporting error. The clarification by AREM sure looked believable to me. At least 2 Multi-billionaires have built substantial stakes after extensive due diligence. Well-respected Lehman analyst, Neil Hermann, has been to Bulgaria - says it's real. This thing's been under a microscope for weeks - no smoking gun indicating fraud. What if the AREM story is real - as seems likely? An investment case for share prices 10+X current levels can be made without relying on nosebleed valuations. If the valuation on AREM was clearly excessive, as many tech's still are, I could could understand the short case. But given the short-squeeze potential and risk-reward, it's hard to see the short case for this, real hard.