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Bill Wexler's model short portfolio... ATHM BTIM TCOMA TRBO ZITL ZONA I decided to start this thread to discuss my very favorite short ideas and to create a model portfolio. Since stocks have decided never to go down again, and it's a bygone conclusion that we are in a permanent bull market, I was curious to see how these particular stocks would perform. My picks are based on one or more of the following criteria: - Market cap of over $100,000,000. - Current stock price of 10 or above. - Atrocious financials. - Products based on pseudoscience or bad science. - Unreasonable expectations of growth, a clear speculative mania. - A religious or cultlike following among small investors. - Very limited upside risk (i.e. bad news about the company should be compelling and publicly available. Overvalued momentum monsters like Yahoo are out of the question.) In the months to come, I will be providing interesting commentary on these stocks on this thread instead of each individual stock's thread. That way, I can get more bang for the buck by making fun of them all at once in one central location! I consider all of these "long term" shorts, i.e. I don't trade them in or out, but I will add to positions on runups. Discussion on this thread should be limited to the stocks in the model portfolio. The model portfolio performance will be guaged by the DOOM INDEX (tm). The DOOM INDEX is the average of the sum total of $1000 worth of each stock on 2/18/97. For the sake of simplicity, I'm throwing out the fractional portions of each stock price and kicking off the DOOM INDEX at a nice round 1000 ($6000/6). The object will be to get the index as close to 0 as possible. If you have any ideas to add to the model portfolio (should meet the above criteria), perhaps I will honor your pick by including it in the DOOM INDEX!! The picks: ATHM: Currently 29 - price target < 5 The internet over cable! Dazzling speed! Great customer service! High reliability! @home (At Home) company promises this and more. The company has several cable operators as investors. The cable companies will supposedly put in the infrastructure and @home sits back and collects the monthly fees. Problem is that the cable companies get a big cut of the take. Some have options (immediately exercisable) to buy millions of @home shares at $.50. Building the infrastructure to support this boondoggle is enormously expensive and cable operators are swimming in debt already. @home still has negligible sales, losses in the tens of millions (and climbing) and rollout plans are far behind schedule. Savvy investors who see the FUTURE have decided not to wait and are willing to pony up $3.5 billion for the company. Here's something for you to ponder: when is the last time your cable company upgraded your service (how about just adding one extra premium channel)? How long did it take? My best advice: don't throw out your modem. BTIM: Currently 17 - price target < 1 Biotime is supposedly a development stage biotech company. Their lead product candidate is called Hextend. Basically it is used as a blood volume extender during procedures such as high blood-loss surgery. Problem is that this market is pretty much covered by commodities such as saline solution and products such as Hespan. At most..a $50 million market. Hextend's chances (even after FDA approval) of significantlly penetrating this market are slim to none...and slim is out of town. Biotime believers make the Zitel zealots look like Quakers by comparison. They believe that Biotime's market is far, far, far bigger...and Hextend has magical properties which make it BETTER than Hespan. Guess what? They're wrong!! TRBO: Currently 10 - price target < 2 Turbochef claims to have an AMAZING! REVOLUTIONARY! cooking "system". What they really have is an overpriced microwave oven which is difficult to use and nobody wants. Of course, super-knowledgeable investors just know deep in their hearts that every fast food outlet in America will eventually see the light and buy a turbochef oven. The company's website is at www.turbochef.com. Bon appetit! TCOMA: Currently 30 - price target < 15 I think that every 5 years or so, investors plow back in to cable stocks when they think that cable is about to deliver the "next big thing". This time around it's the internet. TCOMA (TCI cablevision) has seen an astounding 100% runup in its price over the last 6 months - and the stock has been nearly lifeless for the previous decade. Maybe it's because Bill gates has thrown some pocket change at cable. Maybe it's because they figure that TCI must be worth AT LEAST 7 @homes (see my comments concerning ATHM). Who knows? Inevitably, these investors come to the slow realization that these companies are STILL losing hundreds of millions of dollars, that growth is nearly nonexistent, and that the 70's are OVER man! ZITL: Currently 12 - price target < 1 Y2K's favorite whipping boy STILL sports a market cap over $150,000,000 - this despite the fact there is a real doubt whether it can remain a going concern after another 12 months, but super-smart investors are betting that those enormous Y2K-crisis dollars will come rolling in ANY DAY NOW. Zitel believers dream a future of CEOs panicking because their multi-billion operations will cease to exist on 1/1/2000 due to the so-called "Y2K bug". Naturally, the first thing they do is order their secretaries to call Jack "Yak" King, Zitel CEO. Jack sits back, lights up a cigar and smiles as the beleagured exec pleads for him to get him out of this mess. Then the Zitel investor wakes up and realizes he just lost his life savings to a scam. ZONA: Currently 21 - price target < 2 Zonagen is into making penises rigid. No, they don't operate a chain of nudie bars. They laughably claim to be a development stage drug firm (isn't everyone nowadays?) Their lead product candidate is called Vasomax. Vasomax has only one active ingredient - Phentolamine. Phentolamine is a half-century old generic drug which does not - repeat DOES NOT - do anything at all to help erectile dysfunction. The company tries to obfuscate this simple fact by harping on their "licensing deal" with Schering Plough and their patent application for the Vasomax "fast-acting" formulation. The stock has a loyal following on the SI threads - oddly, some of the followers claim close ties to Zonagen's esteemed CEO, Joe Podolski. The male erectile drug idea was hot in 1997 with Vivus. It no longer matters since it is now clear that Pfizer will own the market with Viagra. | ||||||||||||||
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