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Technology Stocks : Audio and Radio on the Internet- NAVR -- Ignore unavailable to you. Want to Upgrade?

To: d. alexander who wrote (13084)	4/4/1999 3:52:00 PM
From: Patric	Read Replies (1) \| Respond to of 27722

I don't remember the specifics exactly, but the the arbitrage play was based on the fact that MALL had announced its intention to distribute to its shareholders ("spin off") all of its remaining shares in UBID 6 months or more after the UBID IPO. Each holder of MALL on some record date in the future would receive shares in UBID, at a rate of .72 or .73 shares of UBID for every share of MALL. Each share of MALL was essentially worth .72 shares of UBID plus whatever intrinsic value was left in MALL itself, but discounted to reflect the fact that you wouldn't get your UBID shares for at least 180 days. So, once you could short UBID (60 days after the IPO, if I recall), you could take advantage of any difference between MALL's price and UBID's price(multiplied by .72) by shorting UBID and buying MALL. I don't know if that was what the DJ article was referring to. Anyway, I'm not aware that NAVR is going to be spinning its remaining shares of NETR after the NETR IPO (someone correct me if I am wrong on this, please). If I am correct, NAVR will continue to own a large part (I don't remember the fraction) of NETR's shares after the IPO. So, the value of NETR, based on the trading price of its shares on the market, is not likely to directly affect the value of NAVR's shares the way the value of UBID has affected that of MALL. IMO the second spike in MALL's price was based on the direct tie-in created by the spin-off. When UBID's price finally took off (which interestingly it did not do until a couple of weeks after it opened), it dragged MALL with it (although at a discount). Since NAVR shareholders apparently will not be receiving shares of NETR, the only value of NETR to NAVR shareholders after the IPO will be by way of an increased book value of NAVR's assets (i.e. NAVR's interest in NETR will be one of its assets). Oh, I guess one other thing is that NAVR's cash position and profitability should improve immediately after the IPO; although I'm not sure how, I would think some of the cash proceeds from the IPO will find their way onto NAVR's books (repayment of an accrued inter-company "debt" from the financing of operating losses comes to mind), and I believe I recall that NETR as an operating division of NAVR has been a drag on NAVR's earnings and cash-flow. Again, someone please correct me if I have this wrong, because I am operating strictly from memory and my memory has been known to fail me. I'm not sure what this all means to me as a trader (I use that term very loosely), other than that I don't expect another NAVR run-up to any great extent AFTER the IPO, regardless of how NETR trades. #B~}>

To: d. alexander who wrote (13084)	4/4/1999 8:29:00 PM
From: Mad2	Read Replies (1) \| Respond to of 27722

Dear d. alexander I've seen a variety of attempts by various posters to set a discount from which the parent of the spun ipo should trade (based upon the inherant value of stock held by the parent of the spun company). In the most recent case that I followed UIHIA/UPCOY, UIHIA holders indirectly held 1.92 shares in UPCOY (ie 77 mil divided by 40 mil, where 77 mi is the shares of UPCOY held by UIHIA and 40 mil is the total of cl A and cl B shares of UIHIA outstanding). As of last Thursday UIHIUA closed at 44 3/8 and UPCOY closed at 39 3/8, with one share of UIHIA representing $75.6 shares of UPCOY which is a 40% discount not counting UIHIA's other holdings est to be $500 mil or $12.5/share. I for one was quite supprised how UIHIA/UPCOY traded, with UIHIA at a discount of 50% when you factor in the $12.5/share for other value in UIHIA. My sense for this behavior is that it is dependant on float and supply/demand. Given that the free float of a ipo tends to be smaller than of the parent, results in a greater supply of shares for the parent and thus the lower price, relative to the spun business which benifits from the "attention/support" of the underwriter as well as the smaller number of shares. Going back to the argument presented by Christian 1310, he attributes NAVR's lower than expected price to date to the flow of new shares from insider/warrant holders as compared to zurdo's argument of short sellers. NASD's short interest on NAVR indicates that for the past 3-4 months shorts have been net buyers of NAVR, thus C's point of view is correct in my opinion. I do think in playing NAVR it's wise to focus on supply/demand (and watch daily volume) rather than speculate on arbitrage. Valuations of internets are not analytical, as such analytical methods shouldn't be relyed upon. Traders and trading volume are what sets the stage for these companies, thus studing the past behavior is similar situations will be more reliable and profitable. Regards, Mad2