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

To: S Shaw who wrote (3874)	3/2/1998 9:25:00 PM
From: Pancho Villa	Read Replies (2) \| Respond to of 18691

To All: On BFIT. Roger and others have talked about regret from not having done their homework. IMO, had they done their homework, they would have probably shorted much more! The value of BFIT using accepted fundamental analysis tools indicated and still indicates the stock is not worth more than about $5 with little upside risk of ever getting substantial cash flow growth. The problem is that the price of a stock is not always in sync with the value at which it trades (that is why we are spending time here. Otherwise we should just index and go fishing) I say it again, except for the much higher level of debt (not to say that BFIT's isn't quite high), WDRY has better margins, cash flows and growth prospects. The problem with BFIT has to do with mutual funds buying heavily into a small cap stock (by mutual fund standards 500 million is small cap. less than a year ago BFIT had a market cap of less than i million), thus pumping up the price. The asumption in shorting BFIT as early as last November was that smart investors would bring the price down quickly when realizing the company is not very likely to implement a meaningful turnaround [i.e., as dog a company as I have ever seen]. Instead, players decided to wait and see if a very low probability event materializes. It may even be that Q1 results massaged by the accounting changes and some other clever accounting tricks (yes this is done all the time!) pump this puppy even higher. Any one who wants to know more about how stocks are valued by the market and what works and doesn't should buy and read "A Random Walk Down Wall Street" 1996 edition by Burton Malkiel. I am now reading this edition for the third time. This book can be considered among those who teach "real medicine", not witchcraft. You will be surprissed by the findings that some pretty smart people have come by. Pancho Investing is a challenging game. making a buck sitting on a chair ain't that easy. Lot's of people competing at it.