To: John Arnopp who wrote (2250 ) 2/9/1999 2:40:00 AM From: michael r potter Read Replies (2) | Respond to
Re. Valuation: What so many new buyers seem to be missing, is that the market is a discounting mechanism. The move from $25 to the $40s discounted SFE's to be monetized interest in V-net [whether it turns out to be $.60 or $2.00 doesn't change much] and it goes a long way to discounting a future offering of Internet Capital Group. That is what the majority of the $20 [$640 M added to SFEs market cap.] run up was about. For one to buy in the $40s for the exposure to ICG and Vnet is asking the market to discount it all over again. It don't [usually] work that way. Technically, the action has been sloppy with Thu. being the warning shot. Heavy volume with an intra-hour spike to $47 and closing up a mere 1/4 pt. near the lows of the day. The quick trip down to $40 has left SFE short term oversold, but long term overbought. If the s/t oversold leads to a quick emotional spike up tomorrow or Wed., co-incident with the V-Net offering on Wed., I will consider it a gift. This is not the clean, all clear technical situation that was described in earlier postings during the first few weeks of SFE's run up to the mid 30s. Ideally, SFE would pull back into the mid $30s while the NAV moves to the upper $20s during an emotional vacuum that could occur after V-Net is a memory and ICG is not on the immediate horizon. This is not a prediction, but an outline of what one might look for. Just a guess, but a 25% premium to NAV would be about all one could hope for. To wishy- washy? OK then, how about a $29 NAV and $36.25 buy point [25% prem.] on March 16. [Disclaimers apply! Especially when dealing with a stock driven by internet fever] Now about CMPC: Today was magnificent! About the same situation TBL and SFE were at the start of their run, creeping out of a good base, then exploding up in one day on huge volume and closing near the highs of the day. No news- typical and a positive. Those accumulating under $5 should be amply rewarded. Time will tell--no indicator works all the time but this is a high probability one. Thanks, Mike
