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Technology Stocks : Rambus (RMBS) - Eagle or Penguin -- Ignore unavailable to you. Want to Upgrade?

To: Gary Wisdom who wrote (10444)	11/27/1998 2:06:00 AM
From: Dave B	Read Replies (2) \| Respond to of 93625

Hello, all. I'm another lurker who's finally decided he may have something to contribute, making it worth the price to post. I've held Rambus since the 40s and 50s before the original 86 ¾ high, and have done some trading in and out with my IRA shares. I've been following your board since about message 3000 or so and have enjoyed the running commentary (watching the bears come and go and the bulls come). The price action of the last week or so has had me baffled, though I have a theory I'd like to test with you. After the quick run-up to 80, I sold my IRA holding at 79 ½, thinking I'd wait for the standard gentle glide back down. I bought the entire lot back a couple of days ago at 85 ½ when it didn't happen. So I've been trying to understand why the pattern has changed (especially since there's no news), and here's a thought- Imagine you're a fund trader who holds, oh, pick a number, let's say 3.5 million shares of Rambus. In about 2-3 weeks your fund is going to have to post it's year-end closing numbers, pay distributions, etcetera. You want to keep the return on your funds as high as possible to look as good as possible. If the stock slides from 82 back to 70 or lower, you lose $40 million or more out of your total holdings of just under $300 million. Not good. On the other hand, the stock has very few actual tradeable shares (didn't someone recently post that 9 million Rambus shares are held by institutions, leaving 4 million for us shmoos? Or am I mis-remembering?), so if you spend a million or so a day buying the little bit of stock available, then not only do you stop the slide, but you actually increase your existing holdings. In fact, with the 2+ point jump in the last seconds on Wednesday, you increased the value of your existing portfolio of 3.5 million shares by $7 million (not that you would ever get that if you tried to sell, but who cares - we're just interested in the numbers for mid-December right now). And the million that you spent when the stock price was at $82 is worth even more now that the price has been driven to $87. It seems plausible. The problem I have with this possibility is that a $40 million decline is probably a drop in the bucket relative to your overall fund holdings of multiple billions and would show up as the smallest of changes in your overall returns. So why bother? On the other hand, maybe every little drop helps. If this scenario is true, what do you do after the closing day in mid-December? You obviously aren't going to keep investing just to keep the price up - you don't care anymore - though you may continue to invest as part of your regular plan to accumulate more of the stock. Do you sell the extra shares you've purchased? Probably not, since you believe in the company and feel it's going to start taking off early next year anyway (that's why you bought 3.5 millon shares to begin with). These were not wasted shares that you bought. Or maybe you do sell some so that you can take a little profit while it's there. Are we back to our slow gentle glide down at that point? Any thoughts? David B (who at this point thinks he has stopped trading and is only going to add to his position as the paychecks arrive, though he might change his mind after a 2-day, 30-point run-up). P.S. I live in the next town over from Rambus. I went to the annual meeting last year which I'll tell you about in another post. It still makes me smile.