OK Ztect,,
I'll Play..on KTEL are you ready to start verifying?
On April 16th, 1998 I was contacted by the traders at Key West during the afternoon and was told by the President of the desk that he was shorting a POS called K-TEL he was 20,000 shares short at a price of 20.12( pre-split ).. The stock was trading huge volume and asked me if I would do a analysis and press- release about K-Tel,, every press release I had done proved to very accurate and carried weight).,, I was in california closing on my new home, I asked him to fax me what he could and id see what i could do..I recieved the graphs, finacials and days trading activity,, without taking time to really study the issue I came away with the feeling that based on the fact it was only 5 or 6 bucks a few days before and had traded total volume of 600 shares on the 8th, and hadnt traded since the 6th and the volume was 1200 shares...I couldnt believe it was trading with 5 million shares all from a news release that they were going to offer their products via -the net, ( keep in mind XCIT is still 15 or 16 bucks and Intermania hadnt taken hold just yet)..Now KTEL was 20 [plus bucks.. So I prepared the following release, and released it via Business Wire at 4:09 pm EST, this is almost 10 minutes after the market closed...
KEY WEST ISSUES SEVERELY OVERBOUGHT RATING APRIL 16 1998 4:09 pm EST
" Business Editors
Hurst, Texas---(Business Wire)-- april 16, 1998--Anthony Elgindy, Chief Analyst of Key West, stated today , " Although KTEL has announced plans to offer their products via the internet, this hardly supports an increase of 300% in market capitalization.When the hysteria dies down and the volume dries up, the stock should settle to a more appropriate range between $5 and $7. This could happen very quickly based on earnings and book value."
Key West is a Market maker and currently holds a position consistent with the above rating.
This release came after the close , and as such noone could really trade upon the news..and Key West didnt do a single trade after the realease that day..Remeber I was in California at the time..
I then went and asked for printouts on CDNW and others that were selling music via the net so I could do some follow up work..
I didnt like what I saw..I saw that CDNW adn the other Internet music retailers had huge market values and no sales to speak of..KTEL had a tiny market cap and over 100,000,000 in sales( RELATIVELY) and I immediately realized that the Publics perception was insanely out of adjustment and the beginning of what we know call intermania was upon us..I contacted my traders at home and told themn that I was reversing my recommendation immediately,, they told me what I already knew ,, that we would and could lose lots of money becasue we were short 20,000 shares +..
The next morning at 9:15 am it was sent and at 9:28 am EST the following release was recieved by Business Wire and hit the tape.
2 minutes before the market opened.
Key West remained short 20,000 shares while the world read the following statement.
KEY WEST REVERSES RATING APRIL 17 1998 9:28 am EST
Business Editors
Hurst , Texas--(BUSINESS WIRE ) --April 17, 1998--Anthony Elgindy, Chief Analyst of Key West, stated today, "We have decided that we should reverse our position based entirely on the Market's valuation of KTEL's Competitors on KTEL shares and we believe that, although this sector is overbought, KTEL shares represent the best value of all the competitors.We believe that KTEL shares could actually trade in the $30- $ 50 range and still remain a good value for long-term holders. We now rate KTEL as a BUY on market dips"
Contact: Key West Securities,Hurst
At no time did I allow the traders to cover prior to submitting this release and at no time did I state any change in our inventory positions.
Once the release hit, they were allowed to buy back KTEL and they did at an average of 22 or 23..The firm lost approx..$ 50,000.00..
They then reluctantly went long at 25 a total of 6000 shares..
Within two days the stock hit 50...I t continued to trade up higher and higher ,, I got several calls from traders who were short who wanted to kill me..
KTEL shares continued to trade higher and Higher ,,then Louis Rile issued a release the stock could hit a hundred and KTEL announced a stock split( inorder to prevent all gains from evaporating ).
I continued to watch the activity and I saw CDNW coming down and othe music reatilers drift lower..when KTEL hit 70 on May 4, 1998. I issued a SELL/SHORT RECOMMENDATION which I have re-iterated many times since then for various reasons..This was released Via Bloomberg News Wires ..analyst desk..
So to make a long story short I sacrificed my firms position and the potential that the stock could come down and we cover at a profit or a break-even by announcing my true opinion, even if I would suffer finacially for it...
My Sell rating was announced after the close and the Firms short was already established.. The reversal occurred before the market opened the next day..so it is obvious that Key West never was abvle to benefit from the Sell recommendation and was hammered because of my reversal.. the only reason I did this was because My integrity is worth a whole lot more than whatever the loss may have been and I was interested in being honest, even though I have never known a Firm to ever reverse itself prior to adjusting its inventories..
It was not fun and it was not pleasant doing it..but I couldnt stand behind the SELL..after doing the due-diligence ..I should have done before announcing anything...
This reverse rating you speak of on KTEL ..is the one I am most proud of. |
