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Strategies & Market Trends : Roger's 1997 Short Picks -- Ignore unavailable to you. Want to Upgrade?

To: CalculatedRisk who wrote (9094)	12/30/1997 5:50:00 AM
From: Bill Wexler	Respond to of 9285

ONE TO WATCH: WJCO This one grabbed my attention because I'm somewhat familiar with the contact lens business (I've been following the turnaround in a great stock - COO). Something is not kosher here - but I'm just starting to investigate. One thing that really caught my attention was the fact that the company recently did a public offering of 4,000,000 shares...3,500,000 which were sold by insiders. Then in November, the company filed to sell another 1,400,000 shares - all by insiders. This is a company with about 18 million shares outstanding. Compare the financials of COO to WJCO and my first impression is that WJCO is a screaming short. I'll dig in a little further...

To: CalculatedRisk who wrote (9094)	12/30/1997 7:01:00 AM
From: Pancho Villa	Respond to of 9285

CR: thanks for your input on WDRY. I agree with your overall asessment. Operating margins are OK (ignoring debt service), internaly generated cash flows are adequate for debt service but are not adequate to retire debt. This would require issuing equity (what any sane CFO would do to improve leverage rartios) with the associated dilution. As for the green shoe, I wonder how far is the underwriter willing to support this puppy if hell breaks loose. Bottom line no risk of default in the near future, they may continue to play a revenue growth game, but return on investment (adding back depreciation and charges) is as bad as I have seen but this may take time to show up in the stock price. I am likely to wait until next year, if not till March, probably until the end of January. On the other hand upside risk should not be that great. Pancho