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Technology Stocks : ALU - Allou Health & Beauty: Another Web Play -- Ignore unavailable to you. Want to Upgrade?

To: Linda Kaplan who wrote (368)	5/9/1999 2:06:00 AM
From: Questerr	Read Replies (3) \| Respond to of 418

Linda, I am sorry it has taken me so long to get back to you. I have had yet another very positive conversation with David Shamilzadeh. I feel very comfortable with him at the helm. He and I are still discussing the details of the FC deal, just some technicalities that I am confused about and most interested in, but nothing I consider suspicious. (Trying to understand extent of Jacobs ownership of past FC losses vs. ALU shareholders and how it was dispensed through the FC deal with the Venture Capitalists, etc). Again, I can't say enough positives about David - he is quite sharp and very focused on the bottom-line. He is presently shopping his $100 million bond deal around to 3 firms, one of which Allou currently has an investment banking relationship with. The other two firms are high profile, if not higher profile than the first, with the second two having significant retail presence. David is going to require whomever does the underwriting to provide Allou with analyst coverage - something we desperately need. Oftentimes these firms do it anyway, because underwriting a bond equates to an endorsement of the company, which justifies solid support for equity investment. He met with the Amex specialists (whom he has good relations), and has asked them to show their commitment to Allou by supporting the stock price more than they have recently. The specialists know where the selling pressure has been coming from (I-investors) and see it abating very soon. David has a meeting scheduled with two gentlemen from the NYSE next week. Unfortunately they called him and told him the NYSE is about to pass a measure requiring market caps for all NYSE stocks to exceed $100 million. David petitioned saying that even though Allou has a $45 million market cap, it has a book value north of $70 million. The new NYSE restriction is aimed at targeting companies that have negligible "real" assets and inflated market caps from being listed on their exchange. Allou has just the opposite problem, assets worth more than $70 million, and market cap that is much lower. The NYSE is very interested in Allou, and may make an exception for us. David has had recent conversations with some of his institutional investors, and he thinks they are gearing to add to their current positions as the company has become more of a "value" play. He also spent the better part of a day (1/2 according to David) with an independent analyst who will be publishing a report in the not too distant future. This analyst was formerly the top Health and Beauty Care analyst for some well-known Wall Street firm - and has a good following. If I had more $$$ lying around I would invest more, however, I am fully invested in this company right now - unfortunately all of it currently at a loss. But I know this company is for real and should be trading in the $20-$30 range (minimally). Another noteworthy item, Allou has a very valuable license, which it was once granted long time ago, to sell drugs directly on behalf of all the major pharmaceutical companies that not many in the industry or ALU investors are aware of. These licenses are very limited, and aren't being produced anymore. The few that are out there are good forever. A company that was losing buckets of $$$, recently sold for huge sums just for this coveted license. David thinks this license is worth at least $300 million - add that to our market cap as an extraordinary gain and what do we come up with? Did you also see in his press release that he mentioned the new California plant coming on-line could do $100 million a year worth of business with 55% margins. That's another $55 million EBITDA. Between that license and the plant we could very easily add another $355 million to "net" revenues ($55 million as recurring plant revenue with an earnings multiple attached to it!) If I am conservative and attach a multiple of 8 to the $55 million, we are looking at $440 million additional market cap for the plant revenue, and $300 million extraordinary gain on the pharmaceutical license - for a grand total of $740 million which could be added to ALU's existing market cap. If the cap is now at $45 million and we add $740 million more, we are looking at an $785 million market cap - which still puts us at a conservative 8-10X earnings multiple, $320 million cash sitting in the bank from the $300 million license + $20 million sale of FC, and throw on top of that 13% ownership of the "new and improved" FC. If the market cap gets to $785 million (as it should) - our stock goes up 16 times from here or to $128 per share. Its nice to know ALU could trade at $128 and that would still represent trading at a comfortable 8-10 price to earnings multiple for the institutional/retail value investor!!! I've decided I am going to charge all the institutional investors for this DD. Everyone else may have to receive it through 'private messages'. This stock, upon discovery, has the potential to explode! Best of luck to all!!! : )