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.

Strategies & Market Trends : Shorting stocks: Broken stocks - Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Spytrdr who wrote (1656)	8/17/1998 4:13:00 AM
From: Sword	Respond to of 2506

You should short any company with substantial business in Asia and that has a Current Ratio of 1.5 or less and that has recorded increasing inventory levels during the last quarter. These companies will get massacred during the coming 6 months, because their receivables recorded as assets will rise substantially, destroying their balance sheets. (Their customers aren't going to be able to pay their bills.) In addition, companies like SRCM will probably go bankrupt. SRCM is for all practical purposes insolvent right now. The stock price just hasn't reflected it yet. -Sword

To: Spytrdr who wrote (1656)	8/17/1998 4:38:00 AM
From: Sword	Respond to of 2506

In addition, companies with balance sheets that are already poor will experience difficulty in securing new financing. Debentures will be less attractive since they are unsecured. Issuance of Preferred Stock with convertible clauses will become more common place as a substitute. This will cause dilution of earnings per share. The IPO market will dry up so spin-offs will become less commonplace. This will prevent companies from easily divesting unprofitable divisions. Some specific examples that I would recommend include: Category 1 (Declining Current Ratios): AMAT, NVLS Category 2 (Poor balance sheets): OCOM, VLNC, SRCM, POSS -Sword P.S. Chinese market now down the equivalent of 750 Dow Jones points.