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Strategies & Market Trends : Gorilla and King Portfolio candidates - Moderated -- Ignore unavailable to you. Want to Upgrade?

To: tinkershaw who wrote (728)	2/20/2004 7:40:31 AM
From: Mike Buckley	Read Replies (1) \| Respond to of 2955

Tinker, If all your free cash flow is spent buying back stock to compensate for stock options, then you have $0 free cash flow as it is essentially the cost of employing labor. For the same reason you wouldn't track earnings without tracking earnings per share, you wouldn't track free cash flow without tracking free cash flow per share. Naturally, you would use diluted shares to fully account for options that are in the money. You could also track options that are not in the money to determine risk of future dilution. --Mike Buckley

To: tinkershaw who wrote (728)	2/20/2004 9:06:08 PM
From: que seria	Read Replies (1) \| Respond to of 2955

tinkershaw: I decided that about Siebel long ago; now I try to buy companies that have smaller share counts, especially in their float, and that don't constantly soak the shareholders with option dilution not reasonably related to performance. That criterion pairs up well with a liking for shiny pebbles. Although I have to wade through a lot of lies and junk to find potential tech gems among small caps, it's fun and just one or two can make it worthwhile. I prefer to buy companies with the promise or early appearance of a competitive advantage (so they're still low-priced, in the sense of smaller market caps). So I consider companies such as Bookham and smaller, but not Intel, so that size and leverage work for me if I'm right. I bet to win (as opposed to investing to not lose) by reading and speculating about fundamentals that may drive price to the upside in small caps, while heeding charts to protect my downside. That said, I've found the last few years very tough in tech because I haven't seen much value (i.e., attractively priced risk/reward). I like your posts among many on this thread, but I do miss unclewest's pebble-kicking!