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Strategies & Market Trends : Electronic Contract Manufacture (ECM) Sector -- Ignore unavailable to you. Want to Upgrade?

To: kolo55 who wrote (2052)	5/10/1999 3:24:00 PM
From: MGV	Read Replies (3) \| Respond to of 2542

What a joke you are! First, you wrote: "Today, I did buy FLEX at 44, and I did short one of the EMS stocks as a pair trade. Right now CLS is a prime candidate to short versus FLEX." You explicitly did not identify CLS as the stock you shorted. If you shorted at all, the post suggests you shorted SCI. Second, CLS has risen since last Wed. This means a trader would have lost money on a short of CLS. Third, even in a hypothetical short, you appear to have no conviction behind a short of CLS as you would cover at a loss three days after shorting. Fourth, you purport to value two securities on the basis of pure share price when on a relative valuation basis share price is completely inapposite. If this is unclear to anyone here, consider that a share of one company can trade at a 50% premium to another and be worth significantly less as a company or as an investment. This would be true in the case of a company growing at 10% that is offered at $50 and has 1,000 shares outstanding versus another trading at $33 growing at 50% that has 10,000 shares. The second is worth more and would trade at a security valuation premium as measured by corporate finance metrics. The relative share price is irrelevant to a valuation premium. Klemencic is purporting to compare the valuations of the two companies on the basis of share price! "Well with FLEX at 50 1/2 and CLS at 38 1/2, now FLEX has opened up to over a 30% premium over CLS, and now might be the time to consider reversing the pair trade, and covering the CLS short." Your relative valuation technique is laughable unless someone truly would be influenced by your statements. In that event, your technique would be dangerous. You must have no idea about corporate finance or relative valuation criteria.