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Microcap & Penny Stocks : ACRT about to move to new highs -- Ignore unavailable to you. Want to Upgrade?

To: David S. who wrote (1006)	12/21/1997 7:45:00 PM
From: John Chew	Respond to of 7054

The Bull case in abbreviated form: 1. A large market of $billions for small, medium, and large-size companies to use TADs as a business tool for cash-flow, collection and marketing needs. Actrade created the market and is growing rapidly without the use of debt or issuing much equity. 2. The Company has high returns to capital in the TAD business. 3. Process patent has been awarded. 4. Management has been successful so far in handling controlled growth and controlling costs. 5. Management team is being strnegthen and the infrastructure is being built ahead of growth, yet company maintains its steady EPS growth. 6. Defaults remain low to non-existant. 7. Losses can't be hidden, because of short-dated paper. Investors learn of losses quickly, less chance of earnings surprise. 8. Little to no Wall Street coverage except individual investor magazine. 9. Mr. Pinkie is short. (Mr. Pinkie, Why did Mr. Graham buy Geico, he paid more than 1 times book, yet it was his most successful investment of his career?) The Bear Case Rapid growth is always a challenge to management. Building a successful sales and marketing effort is this company's biggest challenge. EXECUTION of their business plan is the key for this management team. As business grows, ACRT will relax credit standards to maintain sales growth, non-paid TADs will rise, insurance will be lost and risks will go up. (I expect TAD defaults to rise, but the only way for TADs not to be paid is through the bankruptcy of the TAD signatory. ACRT's profit margins and insurance could absorb a higher default rate than what is occuring now, but investors will always have this concern Improving their efficiency in marketing and servicing their clients, aligning their employees with the concept of building shareholder value. ACRT's stock price can be bid up by momentum buyers who do not even know what the company does. Price volatility could be a positive or negative depending upon your point of view. ACRT could be dragged down by the overall market if earnings growth slows, but thenm again investors will be more willing to pay for earnings growth in a slower economic climate with lower interest rates. So who knows? I am on a 24 hour suicide watch now that I have learned that Mr. Pinkie is always right. Why couldn't he have alerted us sooner? The stock is trading over book value. (just kidding) Everyone should know what makes a company's market value trade over its liquidating or book value. Hint: it has to do with cost of capital versus returns to capital. Someone please post the answer.