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.

Non-Tech : Radica Games (RADA) -- Ignore unavailable to you. Want to Upgrade?

To: Wayne who wrote (3235)	3/3/1998 11:27:00 PM
From: Hank	Read Replies (2) \| Respond to of 7111

Wayne, I would like to expound a bit on the acquisition possibility. In my previous message I may have hit the nail on the head regarding the reasons behind the movement in stock price over the last two months. When one company acquires another it is not uncommon for the deal to include both cash and stock. Sometimes it can be all stock. While acquisitions that include stock are not necessarily bad and are often a sound part of a long term growth strategy, it can reek havoc with the short term stability of a stock price because the sellers often churn their newly acquired stock back over into the market. If you think this type of acquisition strategy does not have this affect, then check the charts on Republic Industries (RII). They are known for making lots of acquisitions over the past year using RII stock as currency. We all know that RADAF has a fair amount of cash on hand but I doubt they would be willing to use all of it in an acquisition of any proportions. Hence, they would have no choice but to make up the difference in company stock. Additionally, a fairly large acquisition could reduce your earnings estimate numbers for the year due to the inherent expense involved in these types of acquisitions. I see this as the most likely explanation for all the insider selling and short selling in recent months. Large insiders fear the dilution in stock should such an acquisition occur, so they sold. Other individuals are aware of RADAF's intentions in this area and have shorted the stock heavily in anticipation of the dilution. Frankly, I am astounded that this distinct possibility has been ignored and/or overlooked by the normally astute individuals that frequently post here. Do you recall if acquisitions were mentioned in the CC from 4Q? If it was, it went over my head too since I did listen to that one. I have a feeling that it was mentioned then as well since that would correlate with the beginning of the volatile price movements. Does anybody have a feel for how large an acquisition RADAF might be interested in making? Again, I would like to say that, from a long term investment strategy, acquisitions, if done properly, would be a inevitable plus. However, from a trading perspective, it makes the short term movement of RADAF's stock price even more unpredictable even as far a year out. Hank