To: DRL who wrote (2517 ) 4/8/1999 5:24:00 PM From: michael r potter Read Replies (1) | Respond to
I watched the last 10 minutes of trading in real time, and the volume and price movement was impressive. Closed at $93, high of the day. As mentioned right after the first big leap from $40 to $48 in one day, that kind of movement attracts attention and buyers and the process gains momentum like a freight train gathering speed. With only 33M sh. and a much smaller float, as the great mass of investors hear the story and want in, there is not enough to go around so prices shoot skyward to induce holders to sell. That in turn causes delayed openings and news on CNBC which brings the stock and story to the attention of an even larger group of "investors" looking for the next hot stock. The beauty of SFE and most internets is that people pay almost anything because they are buying the future. They can and do put almost any valuation on the future, and are generally not so well versed in fundamental analysis anyway [thank goodness]. Compared to Grahm and Dodd, this is Pluto, but what is, is. Despite our knowledge here of SFE, most still have not heard of SFE, so the pool of potential recruits with greed in their hearts is still large. So, despite some quick, and sharp downdrafts that could start soon, IMO SFE will go higher. Short interest was high, and probably there has been a lot of short covering, but my guess is that new shorts have stepped in to take their place. Their covering should also add fuel to the fire. To say SFE is overbought technically is an understatement. Strong stocks can stay overbought for some time before indicating trouble. In a brief 6 mo. SFE has gone from a company whose price was determined by the value of its ownership in publicly traded companies, with a small premium for private deals, to an internet stock that as a bonus has- as a small part of its value, an interest in publicly traded companies. Re. Valuation: I think it is safe to say that SFE suspended their buyback well before the stock hit $35, and should seriously be considering a secondary of 5M. Sh. They could always use an extra $450M. Makes a lot more sense than selling their public holdings which are a much better value than SFE itself. As a side note, the huge increase in price means that new buyers will have to shell out a heck of a lot of $ to participate in a rights offering [and get much benefit from it]. If SFE splits 2 for 1, it will be most difficult for Safeguard to offer rights on a 1 for 5 basis. It should be more like 1 right for 10 SFE after a split Mike.
