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Technology Stocks : IFMX - Investment Discussion -- Ignore unavailable to you. Want to Upgrade?

To: Tom Gebing who wrote (12210)	10/27/1998 12:21:00 PM
From: Jay Ver Hoef	Read Replies (3) \| Respond to of 14631

Here are a couple of news items: Microsoft Revamps Data Warehousing Alliance to Benefit Microsoft SQL Server 7.0 Customers biz.yahoo.com Question: IFMX is trying to specialize in several areas, one of them being data warehousing. Is this posing a new threat to IFMX, or is MSFT SQL-server still at the low end? Informix and Siebel Systems Announce Global Alliance biz.yahoo.com Question: Is this significant? Finally, regarding the current prices. I think most of you are missing the main point here. Price is driven by supply and demand. I don't think the market has a very long memory actually, and most funds and analysts recognize that IFMX is a new company. IFMX had a very good quarterly report. Why hasn't the price risen? Because Fletcher is probably sitting on over 10 million shares of preferred stock in IFMX. They financed the deal over a year ago, where they got over 16 million shares. Now, they want their money back so they can go on to other things. They have single-handedly driven the price down throughout the year. They have been trying to unload stock, but each time they do, they drive the price to where it is not very favorable. I seem to recall their basis is about 4 1/2. They undoubtedly took out the huge straddle position. They knew that the good report would tend to drive the price of IFMX up, but they also understand the principles of supply and demand. Of course, they would like to sell all of their shares at 7 and 8, but each time they do, they end up driving the price down. So how do they maximize their profit. As long as there are willing buyers, Fletcher is dumping shares at 5 1/4. The price will not rise until they are out of shares or we reach the November stike date. It was a good move on their part. They get to pocket both put and call premiums and they get to convert a huge chunk of their shares into cash, so they can go on to other investments. Including premiums, they are probably making around 6 per share, so they are making 33% in a little over a year. Beats the bank's rate. I'm sure they have calculated the daily volumes on IFMX and determined that they had enough shares to keep the price at 5 until the November strike date. After that, we will have to see if they dumped enough shares so that the supply slacks off. Only then will the price rise. Or, if Fletcher has enough shares, they may open a new staddle. So, if you are long and you want to make a little money, you might consider selling covered calls (Nov 5). I'll bet this puppy closes at exactly 5 on Nov 20. Of course, then we are getting near to end-of-year tax-loss selling, and 1999 holds the spector of Y2K spending, so they may be difficult times. I believe IFMX has turned around, and the price right now is more than fair. However, I would not expect too much before the first of the year, and then it all depends on the markets perception of the relationship of Y2K spending and it's effects on software companies. All I know is that if I ever see another stock of mine finance a deal with preferred convertible stock, I'm going to dump my shares and short the company (or buy puts). Still long though! Best Wishes, Jay