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Strategies & Market Trends : Roger's 1998 Short Picks -- Ignore unavailable to you. Want to Upgrade?

To: Roger A. Babb who wrote (1397)	1/23/1998 10:25:00 PM
From: Gotham Guru	Respond to of 18691

<<Craig, you are right, I missed digl. I hope you were short. How could we have seen this coming?>> I had a dummy short portfolio for cos with p/e of >100 and psr of 20+, DIGL was in it (i'm still tracking the portfolio) ---others in the group are ASDV AVEI DIGL LAMR LHSG(up 7 1/4 today-no news) TCA anyone have any FA and TA on LHSG? fwiw Instigator

To: Roger A. Babb who wrote (1397)	1/24/1998 12:03:00 AM
From: Hank	Read Replies (1) \| Respond to of 18691

Roger, Although I recommended SGY as a long in an ensuing oil panic, I should have mentioned that it is a screaming short right now- assuming oil prices are destined to fall lower. It is at a predicable point now where it will easily fall to the $25-$27 range if oil prices collapse further. I recommend shorting with a call hedge if you're nervous about this. Then, when oil prices bottom, go long as hell because this one will rebound in a hurry back to the mid 30's. Hank

To: Roger A. Babb who wrote (1397)	1/25/1998 2:03:00 PM
From: Brooks Jackson	Read Replies (1) \| Respond to of 18691

Re DIGL, which dropped more than 50% in one day. Roger asked: "How could we have seen this coming?" DIGL seems to have gotten in trouble counting unhatched Asian chickens. Then it had to restate earnings big time. (See press release quote at end of this post). That makes me think that there might be other companies with similar problems about to surface. The factors to look for would be a substantial fraction of "sales" in Asia and accouting practices that book income when product moves to a distributor, before it is actually sold. But -- how would one go about screening for such companies? Is there a name for this accounting trick? (I assume such a practice is GAAP even if it is essentially dishonest, dangerous and stupid -- no surprise there.) Just a thought. (Here's what the news release said:) "The company's decision to restate the 1997 results of operations resulted from the discovery of certain errors in the timing of revenue recognition and a review of related accounting policies and procedures. The company also announced that after consideration of the uncertainty in various international markets, the company has instituted a policy of deferring recognition of revenues on sales to international distributors until the product is actually sold by each distributor to its end user customer. "

To: Roger A. Babb who wrote (1397)	1/26/1998 6:26:00 PM
From: craig crawford	Read Replies (1) \| Respond to of 18691

<< Craig, you are right, I missed digl. I hope you were short. How could we have seen this coming? >> I covered too early. That's why I call it the one that got away. It would have been my gretest short ever--from 20 to 2 in just a few months. I covered around 12, so I missed the last 10 points which happened almost in one day! I just know that the stock looked quite pricey, but the chart looked great. It started to break the uptrend, but I thought that was just due to market weakness. When I saw the market recovering I figured DIGL would recover as well. Now we find out they have to restate earnings.