Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : NEXTEL -- Ignore unavailable to you. Want to Upgrade?

To: John F. Dowd who wrote (3997)	1/7/1998 10:37:00 PM
From: Al Gutkin	Respond to of 10227

John: Maybe I wasn't clear. Long term, no effect, short term yes. Ok lets take your scenereo. Nextel management sees a good deal in making an acquisition of a small provider, they look in the check book and there isn't enough cash, trading stock is an option, floating another issue is another option. Lets follow both. The stock trade, good business sense, no cash, not much dilution, usually recepients of stock don't rush to sell. They become long term investors that believe in the combigned company's growth. They hold on untl they see a big negative, and there are laws that govern insider trading. Western Digital is getting sued by it's shareholders Second, floating a new issue. Well, if its done the right way, it could be used as collateral for a bank loan, it could be sold as a private offering(to MOT maybe at a discount), or it could be just turned over to a brokerage house with orders to dump it fast. Yesterday Jan 6, at approx. 3:50, 1.3 mil shares hit the market. This took the stock down and obviously got small investors caught with margin calls. Today, Jan 7, it was a normal trading day. The small guy, you and me, took the market back up. I'm sure the market makers helped, otherwise they would get caught with excess inventory. Lets remember. Floating stock is a low cost way of raising money. No interest or dividends have to be paid. It's not a loan, It's a license for a company to print their own money. Where are we. Let me tell you where we are. We see a company that has potential, we see a company that has a bright future, we see a company that has a product that we believe in, we mortgage the house, cash in the bonds, sell our real estate so that we can be part of that company's success. Then, the management of tha company dilutes our interest, doesn't matter if only for a day, which leads a person to believe, that if it happens once, it could happen again. Looking to the past, I kinda think it happened before, we just weren't watching closely. Hope I'm wrong, cause I'm still long on the Nextel product. Al