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Technology Stocks : Cymer (CYMI) -- Ignore unavailable to you. Want to Upgrade?

To: H James Morris who wrote (12362)	1/7/1998 1:36:00 PM
From: Mr. Aloha	Read Replies (2) \| Respond to of 25960

I haven't looked at the short interest very closely. I was surprised to see it increase in Nov. I was expecting a decline. I haven't seen DEC figures. I don't know the exact ownership of Cymer shares but there's approx. 30 million outstanding so 4 million is 13% of that total. If you throw in all the insider ownership, Cannon, Nikon etc.. and us maybe the short is more like 22% based on the float being about 18 million shares. It's possible that those debentures did hedge their investment back in October or November and that's the reason the short increased despite the lower stock price. I don't think there's any reason to be concerned with the short. I don't expect to hear that the company was built on air and this IPO is dead. I think the short interest is a positive given enough time. When the Asian story is clear the price will bottom and the shorts will cover as the price moves up. With all the reports of .25 micron conversion and manufactures using Cymer's laser, I expect many sunny days ahead. Aloha

To: H James Morris who wrote (12362)	1/7/1998 2:16:00 PM
From: Elroy Jetson	Respond to of 25960

You and others talk about some 'master of the universe" and are convinved the short interest in the stock is somehow significant.As Warren Buffet has pointed out, derivatives have distorted our equity markets. Let's say you're a brokerage firm. You can sell short a stock and collect interest income on the proceeds. If the interest income you will earn on the proceeds of the short sale exceed the cost of buying Call options, you can lock in an arbitrage profit. If the stock rises in price, you can exercise the calls to obtain the stock you need to cover the short sale and still have your arbitrage profit. If the price remains the same or falls, you still have your arb profit plus additional profits on the short sale on any decline in price. When YOU short a stock, your brokerage firm collects interest income and splits it with the firm, say Styx, they borrowed the shares from. If they borrow the shares from another of their own clients, they collect the entire interest income. Very profitable and no risk! But they can also take some minor risk by shorting the stock themselves and buying Calls as I outlined above. Short squeeze? In this scenario only to the extent that someone sold the brokerage firm naked Calls and needs to buy Cymer stock to fulfill the option contract. Master of the Universe? More like interest income collector of the universe. Bottom line? Derivatives, such as Call options on Cymer stock, distort the market. Stock prices no longer trade on the basis of a company's prospects, but rather are jerked around by program trading dictated by derivative prices.

To: H James Morris who wrote (12362)	1/7/1998 3:15:00 PM
From: Doc Savage	Respond to of 25960

I wouldn't be shorting Cyner! The short interest in Cymer is do to the fact that Cymer has significant customers in ASIA. It is pretty much an excepted fact that those who manufacture stuff in ASIA are getting a break because of the devalued local currancy and those who sell to the manufacturers (AMAT, CYMER, etc) are hurt for the same reason. Because of the devalued currancy, the ASIAN manufacturers cannot afford to expand their plants. However, I feel that Cymer should be an exception for the following reasons: 1) Cymer has been quoted as saying that existing backlog and significant orders since last quarter will lead to sequential growth for the next few quarters. I don't expect Cymer to say anything unless this has changed and since they haven't said anything, I assume it hasn't changed. 2) Cymer's product appears to be a necessity for the cost effective production of the next generation of chip technology. I don't think the ASIAN chip manufacturers have a choice but to upgrade their technology. This isn't about expansion, it's about survival. 3) Apparently, Cymers customer base is expanding! Considering the above, I think that Cymer is way way way oversold as indicated by their astonishingly low PE of ~20. The PE of a company with this track record, profits, growth, technology (and lead) and future in this industry could easily be justified as high as 100. In my opinion, this is why the CYMER was at 50 a couple of month ago and why it should be back there within a couple of months. I am sure the smart shorters realized the situation some time ago, made a killing and are long gone. I believe that the current shorters are probably just the typical suckers who lose money. Just my opinion on the current price, the short interest and the future!

To: H James Morris who wrote (12362)	1/7/1998 11:44:00 PM
From: Matt Webster	Read Replies (2) \| Respond to of 25960

Very Little Open Interest in Options... I was checking my Discover Brokerage CYMI option chain, and I note how little open interest there is in both puts and calls. Example is Jan 20 calls with open interest of 382. That means calls control a whopping 38,000 shares. Compare that to Intel Jan 70 (at the money), which controls 2.8 million. Proportional to volume, it seems that there isn't much activity in Cymer. This is interesting because I had started this post with the intention of remarking on how deceptive short interest can be when one does not know whether a short position is being hedged with call options or the sale of puts. This doesn't seem to be the case here. Anyone care to comment on this? It seems bullish to me. I guess we'll have to watch option interest through the end of the month. Matt