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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: Paul Senior who wrote (7220)	5/19/1999 8:42:00 AM
From: James Clarke	Read Replies (2) \| Respond to of 78628

Case is a buy. A 14% return in six months is nothing to sneeze at. I figure the probability of the deal happening is north of 80%, and the downside in Case stock if the deal doesn't happen...that's a tough one, but I figure I could get out at 40 worst case. So at 48, the calculation would be: 20% * -7 points of downside + 80% * 7 points of upside = 4.2 point expected return. That's about a 9% expected return in 6 months...nearly 20% annualized, and without market risk. I'll take that.

To: Paul Senior who wrote (7220)	5/20/1999 2:07:00 PM
From: Allen Furlan	Respond to of 78628

Paul,re cse as play on successful merger. I took small position today by selling Oct 55 puts at 8 3/4 in my IRA account. The risk to reward is favorable but risk is too high for a large position IMHO. First I think nh is paying too much and secondly I think a failure would be costly with cse dropping to mid 30s. However by selling puts against a 90% cash equivalent of a T-note an investor can squeeze out another 100 dollars in interest, on top of the 875 received for the puts, as compared to a cash purchase of the stock. At 975/4625 the 21% half year return is equivalent to an annualized yield of 42% which makes the risk reasonable. The put selling strategy implies a willingness to hold the position until October.