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Technology Stocks : Copytele - Another XEROX in future -- Ignore unavailable to you. Want to Upgrade?

To: Brad Zelnick who wrote (1047)	11/5/1997 1:49:00 PM
From: Wallace Rivers	Respond to of 1320

Good to see you've wandered on this highly entertaining thread from our beloved VI thread. Excellent analysis on COPY. I've been waiting for the company to book sales for years. If they ever do, then I think the bottom will fall out, for, as you have stated, investors will have an opportunity to rationally value this company...thus, in my opinion, the company is unlikely to show anything on the top line. We will, nevertheless, continue to see a parade of press releases, IMO. Good luck and congrats on PFR.

To: Brad Zelnick who wrote (1047)	11/5/1997 2:35:00 PM
From: Ken G	Read Replies (2) \| Respond to of 1320

Brad, Thank you for finally bringing some good conclusive discussion on behalf of the short side to this thread. Refreshing, to say the least. Most of what you say is based in sound logic. I don't need to quibble with your subjective evaluation of profit margin or unit price/cost. I respect your opinion. However, I feel that there may be some contradictory premise concepts in your logic. 1. >>a short will be able to collect interest on the amount of stock he has shorted<< Whenever I short a stock, my broker is lending me the shares to sell short. My cash account is either reduced by the value of the borrowed shares, or I must borrow that amount (at the wonderful broker loan rate) to cover the equity value. Either way, the money is not "free". It is an asset that is borrowed and has costs just like any other loan. And if the stock price goes against me, I am marked to that difference, daily. If it just sits there you are in no different a position that the bulls, we both have lots of opportunity costs to contend with. If moves in my direction, I win, less broker loan rates or otherwise. If it moves against me, I lose, plus broker loan rates. Long or Short, it seems about the same to me. 2 >>To the present Copytele has marketed nothing. Their technology is dated, and appears irrelevent in 1997-1998. They have a demonstrated track record of non-performance. They do not have in-house engineering talent capable of matching current standards. They are unwilling to spend on R+D to catch up.<< I am not contending that if we aren't given any new technological advances in the product that this stock can go anywhere but down. But how long will that take to happen? However, I do feel that the market, lacking any other changes in fundamental data, has already fairly and efficiently valued this concern into the stock at the current level. Any surprises, and hence stock price moves, can only be anticipated to be to the upside. And since this stock has steadfastly refused to go significantly lower than the current level in the last 10 years, given the status quo, what would make you feel that the odds on favorite way to play this stock is to the downside? Further, look at the price increase that we have seen over that same period, this, with only the anticipation of sales driving this stock. Not much of an increase 1 up to 4 dollars. However small, it is better that the loss of $3/share of a short. Is there some change to these fundamentals in the near future that you are expecting, and the market isn't expecting, that would drive this stock to significantly less than current market valuation? Risk vs. Reward seems to be out of balance in your equation. 3. >>The concern is that with all the shorts having covered in anticipation of the spike, there will be no spike because no one will be around to buy.<< Assuming that you are correct that the shorts are now covered at the current level (I seriously doubt it though, look at short interest in this stock and the immediate response to my post by another short), I would ask you, who is going to sell at this level? Too many limitations built into place by the SEC and the brokerage houses making it difficult to short. And why would a long sell at this point? I see downside risk as minimal And again, I would agree that the stock won't go up without fundamental data change. That is the only wild card not yet anticipated in the market valuation. After all who is expecting it? I am willing to conceed that my downside dollar risk is $5/share. What is your (or other bears) $/share limit of upside tolerance. Should the slightest inkling of a profitable quarter be set in place, don't get in the way of the stampede. 4. >> So from a value investor's point of view the key is sales. This company needs sales to allow the market to price it. Make a few cents, lose a few cents, it doesn't matter. Just price it. Let the technology be judged in the market place.<< Agreed!! Good Investing, Ken