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Strategies & Market Trends : Rande Is . . . HOME -- Ignore unavailable to you. Want to Upgrade?

To: xcr600 who wrote (7294)	5/21/1999 12:20:00 AM
From: Rande Is	Respond to of 57584

XCR, Perhaps, . . .but that is with "earnings based" valuations. The valuations being placed on internet companies are far more generous, especially to companies building internet oriented investments, like PTEK is doing. Also, your math is deducting 40 percent from the larger number of 24, meaning that NO PREMIUM comes from adding over 300 million bucks to the company's assets. If we were to apply your 40 percent figure to anything. . .it would have to be the difference between the value prior to the merger and the newly calculated valuation. . . So if we advance 9 bucks in valuation to 24 from 15 dollars. . .we would subtract 40 percent from the 9 bucks [3.6 dollars], which would leave an advance of 5.4 dollars, which would take us back to 20.40. 20 percent discount would put us at 22.20. Now this is figuring that prior to the buyout, the stock was worthless. . . which is closer to accurate, since nobody understood who WebMD was prior to this week. But here is the most important factor concerning PTEK. This is NOT a fifteen dollar company. It traded above 20 for 3 years prior to last May when it took on some SERIOUS short selling, which drove it down to single digits. . .in fact, it hit 2 something at one point. . .but as news of a buyout leaked and leaked and leaked some more. . .the shorts very slowly began to cover. . .and as the company began to re-define itself as an internet related entity, it got some new investors that helped bid up the price. But it still has many shorts, which are "artificially" holding down any TRUE valuation shareholders may have for the company. So we must FIRST ask ourselves what is a FAIR valuation for PTEK prior to the buyout? Then we add a certain amount of premium to that Fair Value number. . . say 60 to 80 percent of the premium value added to the fair value. After carefully studying the historical quotes of PTEK, and the progress of the company, I would personally place a valuation of about 24 dollars BEFORE the buyout. . . so with this equity investment in HLTH/WebMD being so valuable. . .based on the 100 dollar figure of HLTH and the 1.815 shares given to WebMD holders. . . I would value PTEK shares at about 30 per share right now. . . without even considering that the company is going the way of CMGI, RRRR, etc. . . at which time it should follow similar valuations placing it far higher yet. But at this time, I believe 30 to be a fair number, for reasons given. Rande Is