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| ELE (Endesa):
ELE has bounced off the 62% Fibonacci support level
at 19 1/2.The post privatization selling has run its course. We see little downside
potential from here and are closing our position. (6/16/98) |
| DCLK (DoubleClick):
We have closed out short positions in DCLK. The stock
hit our intraday stop and daily ADX turned down from 53. At this point there is more risk
than reward in holding shorts in DCLK. We expect the stock to trade in a range of 15
to 30 a share over the short to intermediate term. We do not recommend taking long
positions in the stock since DCLK is still overpriced compared to traditional advertising
agencies. (9/16/98) |
| Alcatel Alsthom (ALA):
We are closing our short positions in ALA. The French
telecom equipment maker's shares tumbled 38.5% today after warning of disappointing
profits. The company expects the economic crisis in Asia and Russia to negatively impact
second half growth. The company expects orders to increase by 10% for the year versus the
14.5% rate analysts had been expecting (editor's note: it should be noted that the same
analysts who rated ALA a buy in May at $40 today downgraded the stock to hold after
the company issued an earnings warning). We believe that today's selloff was
overdone. The shares now trade at a steep discount to rival telecom equipment makers.
After the dust settles from today's plunge, we would be buyers of the shares in the $15 to
$18 range. (9/17/98) |
| BAANF (Baan N.V.): We are
closing short positions in Dutch enterprise resource planning software maker Baan NV.
Baan, and its stock, have now completed the traditional trajectory of a hot growth
company: from excess boom to excess gloom. Unrealistic analyst estimates and the ensuing
feeding frenzy by investors lead to a soaring stock price which is swiftly deflated as
irrationally optimistic expectations are not met. BAANF's earnings warning this week
was the final piece needed to complete the sentiment swing. The company announced that it
expected to record a third quarter loss of 13 to 16 cents a share and revenues 30% below
expectations. The company cited adverse economic conditions and the Year 2000
problem as the primary culprits. Baan shares promptly tumbled 39% Monday. We believe that
the move to the downside has been overdone, but we do not view this as a buying
opportunity. The company's shares are suitable for short term trading, but we expect
them to stagnate until the company takes steps to resolve its problems. We will
remain skeptical of this company's growth potential , and of the recovery potential of its
shares until we see evidence that there is a severe Year 2000 induced slowdown throughout
the enterprise software market. If either Peoplesoft or JD Edwards announces similar
Y2K problems, we will be buyers of BAANF shares. (10/15/98) |
| KTEL (KTel Intl.):
KTel stock has fallen 53.8% in the 6 days since we
first recommended shorting it. KTel's shares fell 32% Tuesday after reports surfaced
that the company had been informed by NASDAQ that KTEL "fails to meet the minimum
tangible net asset requirement" for listing on the exchange and faced delisting.
As a result of the stock's rapid plunge this week, we believe that the risks to
maintaining short positions in KTEL outweigh the rewards. The shares are still 40%
overvalued but could rally if KTEL obtains a favorable ruling from NASDAQ or if it
announces any more "ground breaking" internet partnerships. Close short
positions. (11/19/98) |
| Lam Research
(LRCX): Lam Research stock
jumped 6 points Friday after the company was upgraded by several analysts after it
reported a lower than expected loss on Thursday. The company lost 64 cents a
share in the quarter versus analyst's expectations of a loss of 94 cents.
Revenues for the quarter fell to $141.9 million from $292 million last year. The
company reported an increased demand for wafer processing equipment as a result of an
increase in Asian orders. Current estimates call for Lam to lose $1.90 a share in
fiscal 1999 and report a profit of $1.00 in fiscal 2000. The shares are now trading
at a forward price-to-earnings ratio of 38. We believe that the stock's 100% plus
rise this month has left it fully valued and we are closing positions in LRCX. The
better than expected results and improved operating outlook are already priced into the
shares . We believe that the risks outweigh the rewards at this point. Anyone
electing to continue to hold the shares should place a mental stop at the $31 level
where strong support exists. |
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