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Strategies & Market Trends : Shorting stocks: Broken stocks - Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Ocote who wrote (2171)	4/9/1999 12:43:00 AM
From: Q.	Read Replies (2) \| Respond to of 2506

Ocote, re. FAVE, thanks for your excellent summary. And it's a good demonstration of how to do your research on these stocks, too. I admit that I had peeked at FAVE after I did the screen but I quit looking after I saw that Yahoo's marketguide data showed a float of a mere 100k shares. I thought 'forget that'. But you know, the nasdaq wouldn't allow the stock to trade with such a small float, so marketguide must have messed up. So after your post, I checked the DEF14A, and it appears that there must be a float of something like 2.3 M shares. So even if Datek doesn't have it, it's out there. The last 10Q had this interesting bit of news about the liquidity: Management projects that the funds..will be sufficient to cover all operating expenses, including corporate overhead and all 5th Avenue expenses through the first quarter of 1999. Well, hey, that's already over now, isn't it? I wonder what they are using now instead of cash? You mentioned that they filed an NT-10k. The reason given is that their auditor BDO Seidman quit in February. They replaced the auditor with a no-name local outfit ... uh-oh. BDO Seidman gave them a going concern a year ago. They must have found something they really didn't like this time. Wonder what it was. There are convertibles out there, which will dilute the stock eventually. So the market cap is hard to figure, because the number of shares out, at 6 M or so, is surely going to grow by at least a couple of million. If you figure on 8 M shares at $8, the market cap is something like $64 M. To me that seems like a lot for a tiny co. with very little operations. The CEO has a lot of the convertibles himself, as you mentioned, and he's trying to convert them into common stock. I'm not sure that is bad for the company ... he's on their side, and it will reduce their debt service costs and it will make it easier for the co. to get new debt. The financial statements look horrible, BTW. I didn't look at the news long enough to try to figure out what they were doing with a .com, when the co. is/was a cable TV provider for a couple of small communities. But I think there's something promising here, and it deserves some more DD.