From: canslim-owner@xmission.com To: canslim-digest@xmission.com Subject: canslim Digest V1 #92 Reply-To: canslim@xmission.com Errors-To: canslim-owner@xmission.com Precedence: canslim Digest Saturday, 22 February 1997 Volume 01 : Number 092 In this issue: Re: [CANSLIM] Tom's market comments Re: [CANSLIM] (Fwd) Re: On-line trading / SOES Traders? Re: [CANSLIM] Speaking of IFMX... Re: [CANSLIM] ALAB Re: [CANSLIM] Qualifying as full-time investor Re: [CANSLIM] Re: toms comment on Market Re: [CANSLIM] learning experience Re: [CANSLIM] ALAB [CANSLIM] PDS Re: [CANSLIM] learning experience Re: [CANSLIM] Motley fool Re: [CANSLIM] HDCO Convertible Notes Re: [CANSLIM] PDS [CANSLIM] Fw: wisi.com Re: [CANSLIM] HDCO Convertible Notes Re: [CANSLIM] learning experience Re: [CANSLIM] PDS Re: [CANSLIM] Tom's market comments See the end of the digest for information on subscribing to the canslim or canslim-digest mailing lists and on how to retrieve back issues. ---------------------------------------------------------------------- From: "tom worley" Date: Fri, 21 Feb 1997 21:53:59 -0500 Subject: Re: [CANSLIM] Tom's market comments Johan, I too am unable to predict the future, nor do I generally try. That is one of the reasons that I am reluctant to bring my "mkt comments" back to the entire group, evaluating the "M" in CANSLIM involves a lot more than reviewing what happened and why in the latest session. Unfortunately, after about 11 hours at my "day job" which pays most of the bills, and another several reviewing what actually went on that day, I have neither the time nor energy to try and figure out the future. Mostly, if the mkt/stocks are behaving predictably, then I have a clue or two, and go with that. That's why I try to explain what really happened. It at least helps me put that day's action into a larger context. After that, it's up to better minds than mine to figure out the future. tom w - ---------- > From: Johan Van Houtven > To: canslim@xmission.com > Subject: [CANSLIM] Tom's market comments > Date: Friday, February 21, 1997 10:18 AM > > Problem is: I can not predict the future. > > If we break south of 6900 or on the NASDAQ 1320 - 1315 on heavy volume > I'll be afraid, very afraid. In fact I will practically surely sell all my > stocks. On the other hand this might almost be the end of the short term > consolidation period and we could go up agian. The long term trend still is > up... ------------------------------ From: "tom worley" Date: Fri, 21 Feb 1997 22:28:19 -0500 Subject: Re: [CANSLIM] (Fwd) Re: On-line trading / SOES Traders? Not to support SOES traders (even bandits) since they all have a role in a free mkt, but too early to judge the effects of the new rules designed to tighten the spreads since only 50 or stocks are involved, and they are all the most liquid stocks. Let's give it six months or so and see if the spreads tighten up. As one comment on the new rules, apparently it was discovered that SOES traders no longer have to be good for a min of one thousand shares, so many now only guarantee 100, making it far more difficult to get good order execution on larger orders. If any have suddenly started experiencing slow or poor price execution, this may be why. Hopefully just a wrinkle to be ironed out. tom w - ---------- > From: Jeff Salisbury > To: canslim@xmission.com > Subject: [CANSLIM] (Fwd) Re: On-line trading / SOES Traders? > Date: Friday, February 21, 1997 1:44 PM > > As far as the new NASD rules are concerned: The only difference is that > now I get split fills on my 1000 share orders (500/500, 100/900, > 500/400/100, etc.). But this is on about 10% of my trades. Not really a > big deal. The bid/ask spreads are still the same (1/8 to 1/4) and some > quarter stocks are now eighth stocks, which makes it better for me. ------------------------------ From: "tom worley" Date: Fri, 21 Feb 1997 22:40:05 -0500 Subject: Re: [CANSLIM] Speaking of IFMX... Anybody ever notice how no major wirehouse has a rating of SELL, SELL, SELL NOW!!! There's a simple reason, often they also have a financial relationship with the company and don't want to p___ them off any more than they have to. Thus, wirehouses have become artists at how they word things. A rating, to an experienced broker and I like to think I am one, of "neutral", "long term hold", "market performer", etc. is generally a screaming SELL, GET OUT OF TOWN, THERE'S BETTER PLACES FOR MY MONEY, INCLUDING A LOUSY MONEY MARKET!. Sorry to get so violent, but I like to call it like I see it, and a little honesty in this business would be refreshing. If they don't like the stock right now, why not just come out and say that. There's bound to be a more logical entry point later if it really is a good company. Sadly, I'm not picking on IFMX in particular, this report could have used hundreds of different stock symbols with the same words attached. tom w - ---------- > From: Brian Nash > To: 'canslim@xmission.com' > Subject: [CANSLIM] Speaking of IFMX... > Date: Friday, February 21, 1997 3:43 PM > > I've never followed this stock. In a thread the other day, Tom was > saying how IFMX is a cursed stock for him. I got this Smith Barney > soundbite (a 1-H means Buy/High Risk in their nomenclature. Moving it to > a 2-H is a downgrade): > > Since breaking its resistance level of $20, Informix's common stock has > been under significant pressure. we are lowering our rating from 1-H > to 2-H. In our opinion, the company has yet to demonstrate its ability > to rapidly solve sales execution issues and recent sales management > changes could take time to produce improved sales visibility. We are lowering EPS estimates (97 > reduced to $0.82 from $0.90 and 98 from $1.30 to $1.25), and long-term > growth rate (reduced to 30% from 35%). We continue to > believe that Informix is well positioned in the industry, > > Longer term, we continue to believe that Informix is a quality company. > It is attractively valued, has strong technology and is gaining market > share. > ------------------------------ From: "tom worley" Date: Fri, 21 Feb 1997 22:51:32 -0500 Subject: Re: [CANSLIM] ALAB Buyouts (which is one of the best reasons to own regional banks, IMHO) have traditionally come at about 1.5 times asset value. Great Western broke this rule, at something like 2.4 times, and then attracted a competing bid even higher! Will pass this one on to my resident expert on banks (since I don't trust my own judgement and bias) for evaluation. The CANSLIM nrs sound impressive, if he likes it from a value/asset basis, could be a winner. tom w - ---------- > From: CardioPhil@aol.com > To: canslim@xmission.com > Subject: [CANSLIM] ALAB > Date: Friday, February 21, 1997 3:48 PM > > ALAB - Alabama National Bancorp > > C - last two qtrs: +160% then +242% > A - unfortunately its biggest problem (-8% last year). I don't have more info > N - New high breakout on increased volume. I know nothing about Alabama, but > S - 6.0 million float > L - RS of 83, EPS of 92, Acc/Dist B, Grp Rank B > I - Mgmt Ownes 24%, Inst ownership ?, Sponsor Rank B > M - Moving down, but might be another brief correction. Need to watch > closely. > > PE - 13 > Chart - > Consolidation of 2 months in the 17 1/2 to 19 range. Ave Daily Volume of 13K > to 14K. Breakout 2/19/97 on Volume of 28K and breakout confirmation 2/10/97 > on Volume of 61K. ------------------------------ From: "tom worley" Date: Fri, 21 Feb 1997 22:58:54 -0500 Subject: Re: [CANSLIM] Qualifying as full-time investor Sounds like a question best posed to a qualified tax advisor, but will toss in my two cents worth. First, would think sub-chapter S would be better than corp status. Next, would think investing would have to be your primary, if not sole, occupation. Third, would think IRS would want you to show profits at least occasionally so they can collect taxes. Under the old rules, when I had a rental home, IRS only allowed you to write off depreciation and expenses that exceeded revenues (e.g. a net loss) for a limited nr of years, after that they figured you were just running a tax shelter (well, duhhhhh!). I can recall a few years of eating some truly legitimate expenses just so that I would show a token profit that year and "stop the clock". Ultimately I sold the property and paid the taxes on the gains over the depreciated cost basis, but the rules were complicated then and undoubtedly have only gotten worse since. tom w - ---------- > From: Greythound@aol.com > To: canslim@xmission.com > Subject: Re: [CANSLIM] Qualifying as full-time investor > Date: Friday, February 21, 1997 4:06 PM > > This is not really a CANSLIM topic; > > How does one qualify as a full-time investor for federal income-tax purposes? > This would enable one to put income and expenses on a Schedule C return. > > I've looked at incorporating but found that the corporation would be a > holding company and the tax consequences would be disastrous. > ------------------------------ From: Craig Griffin Date: Fri, 21 Feb 1997 23:21:24 -0500 (EST) Subject: Re: [CANSLIM] Re: toms comment on Market Tom, At 09:28 PM 2/21/97 -0500, you wrote: >As an aside, it's too early to start planning strategy for a bear >mkt, better to figure out how to cope with a bull mkt undergoing >sector consolidation, where to put your money in the meantime, and >which sectors will lead the next leg higher. I agree. And once the sectors come into focus. Start looking at the individual stocks. The biotechs and financial sectors will continue to be strong groups I suspect. AMGN did well today. And the banks and brokers continue to be strong. Best regards, Craig PS. We definitely have some committed lurkers on this list. I would not worry about why they are quiet about anything. That is their choice and I hope they are enjoying and getting a lot out of conversation. I also hope one and all will jump in when they have any comment or question. In the meantime, the posters form a consensus for bringing those mkt comments back to the mainstream. PPS. A hearty welcome aboard to Steve and others who have joined the list recently! And just a reminder to let you know that the Canslim list archives can be read by either of the following methods: 1) via your web browser at: ftp://ftp.xmission.com/pub/lists/canslim/ Click on either "archive" or "latest" and browse away. 2) via email: Send an email to majordomo@xmission.com with the following as the body of your message: "index canslim". Then send a follow up email to request an old email from either the "archive" or "latest" directory. Note that your request must be in the body of your email. For example: "get canslim latest/001" will retrieve file "001" from the "latest" directory. "get canslim archive/v01.n066" will retrieve file "v01.n066" from the "archive" dir. ------------------------------ From: "tom worley" Date: Fri, 21 Feb 1997 23:19:20 -0500 Subject: Re: [CANSLIM] learning experience Steve, first let me tell you that my wife was physically and mentally disabled as a result of a car accident many years ago. She taught me a lot about both the frustration and the courage of trying to deal with a "non-handicapped" world, and I respect what you are doing to accomplish the same. I loved my wife dearly, and I miss her every day since her death a little over a year ago. As a result of living with her, and supporting her thru what she went thru, I have become a little militant in the rights of anyone trying to cope with what most of us see as "normal" life. If your friend is unable to tape O'Neill's book for you, please let me know. I will find the time to record it for you. I haven't read it in several months, and I advocate reading it often, so it would give me a good excuse to read it again. Just let me know. In the meantime, if any of the group who are software literate can help out, jump in and offer your expertise. You've got a challenge here, from scanning to voice emulation. This group is unique to anything I have encountered on the net, I like to think we are bigger than just making a profit. tom w - ---------- > From: Steve Shepherd > To: canslim@xmission.com > Subject: [CANSLIM] learning experience > Date: Friday, February 21, 1997 8:59 PM > > William O'Neil's book isn't on tape. I'm going to ask a friend If he would > be willing to read it to me, perhaps on tape. ------------------------------ From: CardioPhil@aol.com Date: Fri, 21 Feb 1997 23:33:24 -0500 (EST) Subject: Re: [CANSLIM] ALAB << Will pass this one on to my resident expert on banks (since I don't trust my own judgement and bias) for evaluation. The CANSLIM nrs sound impressive, if he likes it from a value/asset basis, could be a winner. >> Thanks, let me know. Phil ------------------------------ From: Michael A Langston Date: Sat, 22 Feb 1997 00:24:29 -0500 Subject: [CANSLIM] PDS just looking at precision drilling (PDS), ERG is 99 96 98, acc-dist is B -- she currently appears to be trying to rebase on the 50 -- i notice what look like a coupla 25k sh buys just before the close today -- all round numbers fairly compelling, and at 7% debt pretty unleveraged for this industry any comments from our canadian oil follower? (sorry, i forget offhand who it is) -- from anyone? mike ------------------------------ From: Craig Griffin Date: Sat, 22 Feb 1997 01:05:16 -0500 (EST) Subject: Re: [CANSLIM] learning experience Tom and Steve, Tom wrote: >In the meantime, if any of the group who are software literate can >help out, jump in and offer your expertise. Scanning might work. I have a Visioneer Paperport scanner. It is black and white only, but fairly fast. You feed it one sheet at a time and it stores it in image form in about 10 seconds. The OCR (optical character reader) software is not very accurate (80-90% is not good enough for Steve's requirements probably). The upgraded versions of the "lite" OCR software is supposed to be a lot better. Another problem with OCR is speed. It takes a long time to do the OCR. What is a long time? I can not really say, having only tried it once, just to test it. I just know that it seemed slow on this old 486 computer. My guess is that with a fast Pentium as a given, one could add a Paperport Vx for a street price of about $250. Then upgrade the software to the Paperport Deluxe for $80 and to the Pro version of the OCR for another $120. Total for a scanning solution of about $450. Then Steve would need someone to cut apart the book and feed it into the scanner, one sheet at the time, and let the OCR chug on it. Oh yeah, one would probably need about 250 meg of free disk space to store the images until they had gone through the OCR. Might also need a proof reader. Sounds like once Steve had it in "type written form", he has the hardware and software to read it to him on his PC. Another possibility is to talk to the O'Neil folks and see if they have it available in machine readable form. Probably not, because it makes it too easy to duplicate, but one never knows. Best regards, Craig ------------------------------ From: Craig Griffin Date: Sat, 22 Feb 1997 01:29:23 -0500 (EST) Subject: Re: [CANSLIM] Motley fool The Fools seem to have taken a stab at understanding what separates their big winners from the big losers today. They skirt the edges, once or twice, of an epiphany. It would go something like "what if we could manage to hold on to our big gainers as they go up and cut our losses short"? And "what if we could somehow manage to find the real leaders in the market which will dominate their niche"? But they don't quite get it. CANSLIM is not their bag, yet. They are good, thoughtful investors willing to learn from mistakes. So, today's portfolio summary is worth a look. It will be replaced with another one Monday at 7:30pm. Here's the address: http://fool.web.aol.com/port/port_10a.htm ------------------------------ From: "tom worley" Date: Sat, 22 Feb 1997 08:10:21 -0500 Subject: Re: [CANSLIM] HDCO Convertible Notes Subordinated notes are debt of the company. The subordinated means they are junior to other debt, which usually is secured debt collateralized by assets of the company. In bankruptcy, the secured debt gets paid first, then the subordinated debt, then preferred stockholders, then common stockholders. The "convertible" means that the debt can be converted into stock under specified conditions and at specific ratios. When you look at the short position on a stock, before you assume a possible short squeeze, always take into consideration whether there is convertible debt available. Arbitragers come in many forms, and one is to short a stock that has run up while covering (hedging) the position with a long position paying interest that can be converted into the same or greater nr of shares. Once a convertible debt is "in the money" (e.g. $1000 bond can be converted into 20 shares, stock now trading over $50) then the convertible will trade more or less in parity with the stock so will participate in further growth. Until then it will trade more on its yield, thus it has characterics of both a bond and a stock. Shorters will often hedge their position with convertible debt, holding it for the long term, taking income from it, and periodically shorting and covering using the stock. Hope this is understandable, if not ask away. There are arbitragers who trade between exchanges (minute by minute traders); there are ones who only play buyouts, trusting that the buyout will go thru and buy stock below the announced buyout price and hold for the buyout to be completed (often only making a qtr or half a pt); and there are some who play warrant conversion ratios. tom w - ---------- > From: Zoran Mitrovski > To: canslim@xmission.com > Cc: Zoran Mitrovski > Subject: [CANSLIM] HDCO Convertible Notes > Date: Friday, February 21, 1997 8:58 AM > > Tom wrote: > > [...] > > Because of the "convertible" nature of the subordinated notes being > > sold, they may be a good play for long term holders. I am trying to > > get details on the conversion feature and availability and will post > > Tom, could you please explain what these convertible notes are? > I thought arbitrageurs were guys who go for a clean no-risk > profit by getting into positions that equalize some temporary > market anomaly between highly correlated financial instruments. ------------------------------ From: "tom worley" Date: Sat, 22 Feb 1997 08:27:53 -0500 Subject: Re: [CANSLIM] PDS If my gray matter is still working, I recall taking a "fundamentals" look at this one a few years ago to learn more about how the technology of the industry was changing, and was impressed. Haven't looked at it recently, tho. tom w - ---------- > From: Michael A Langston > To: canslim@xmission.com > Subject: [CANSLIM] PDS > Date: Saturday, February 22, 1997 12:24 AM > > just looking at precision drilling (PDS), ERG is 99 96 98, > ------------------------------ From: "tom worley" Date: Sat, 22 Feb 1997 08:36:29 -0500 Subject: [CANSLIM] Fw: wisi.com Following forwarded from one of my Canadian friends, he's more a fundamentalist, but still working on him. Sounds like this is a good site to visit on any foreign stocks. tom w - ---------- > From: Jacques Ferron > To: stkguru@netside.net > Subject: wisi.com > Date: Saturday, February 22, 1997 10:06 AM > > I checked out that URL you mentioned yesterday, wisi.com > > It's tremendous. Among many submenus, it provides stock information > comparable to Value Line reports -- in the same league but not quite > as good esp. in subjective analysis; but on the other hand they beat > Value line for being free, up-to-the-minute, and especially global. > Wisi covers as I remember 13,000 stocks in about 30 countries. I > checked out France & Canada and they seem pretty complete. I esp. > liked the fact that for each stock they provide basic info such as > shares outstanding that is sometimes hard to find when you need it, and > quarterly earnings for about 10 years back which I've been looking > for for quite a while so I can do some statistical trending. > > Thanks for the tip. > > Jacques ------------------------------ From: Zoran Mitrovski Date: Sat, 22 Feb 1997 11:00:12 -0500 (EST) Subject: Re: [CANSLIM] HDCO Convertible Notes Tom wrote: > Shorters > will often hedge their position with convertible debt, holding it for > the long term, taking income from it, and periodically shorting and > covering using the stock. > Hope this is understandable, if not ask away. Thanks for the education, Tom. Although I am not really interested doing anything in the present HDCO situaiton, it would be good to know how does one find and buy any of those notes? Do they trade on the market under various symbols? Are they listed in IBD? (I know there are lists of preferred stock there but I rarely spend much time on those pages). I also wonder whether I could buy them through E*trade. Anyways, before everyone here started acknowledging my stellar beginnings as a savvy "stock operator", I wanted to say that I added to my short position in HDCO at around 39 3/4, right after (or before) it hit an invisible rock of support at 39 1/4. From that point on it all went upwards to close at 42 1/2 x 42 3/4. Was that thing called "greed" by any chance? ;^) It hit my universal (for the total short position) Buy to Cover stop at 42 1/16 right before the close. I still don't see the Buy to Cover order being executed by E*Trade, although my intraday chart shows plenty of trades in the half hour between my trigger point and the market close. I called them and I emailed them, all pissed by the missing execution, but they assured me not to worry. They are making a "transaction query", and even if the trade had not been executed, they would reimburse me for my loss caused by their error. If all goes well, I should get out of this short-ordeal with a loss close to zero. All in all, a sobering experience for the big-headed "stock operator" who wanted to make his first shorting by going after a great stock in the greatest bull market there has ever been. However, I must say that I didn't panic at all and that the situation never really got out of my hands. It all happened within the realm of possible developments which I have already prepared myself to expect. Cheers, Zoran ------------------------------ From: robert@cybernex.net Date: Sat, 22 Feb 1997 11:11:07 -0500 Subject: Re: [CANSLIM] learning experience Steve, I would call IBD @ 1-800-831-2525 & ask them if they have it on tape or maybe even as a text file. If they don't, maybe they know somone who can help? Worth a shot! Bob ------------------------------ From: robert@cybernex.net Date: Sat, 22 Feb 1997 11:19:45 -0500 Subject: Re: [CANSLIM] PDS >any comments from our canadian oil follower? (sorry, i forget >offhand who it is) -- from anyone? I'll take the anyone part (G). The one I follow & have traded is Cliffs Drilling (CLDR) very good numbers. I'm waiting for a base. I don't think the drillers are dead fwiw. Bob ------------------------------ From: Greythound@aol.com Date: Sat, 22 Feb 1997 11:34:22 -0500 (EST) Subject: Re: [CANSLIM] Tom's market comments In a message dated 97-02-21 10:42:28 EST, Johan.VanHoutven@ping.be (Johan Van Houtven) writes: << Anyhow, I'm watching everything very closely. I'm am NOT relaxed, in fact I'm stressed and am keeping my finger on the trigger... the sell trigger that is. ;^) I wish I were less clueless. Anyone have a CLEAR view on what is going to happen? --- Johan Van Houtven / Belgium >> No-one, I''m afraid, has a clear view of what will happen. This market is like walking up a hill whose summit is shrouded in fog. We don't know where the top of the hill is. But the longer we continue walking uphill the sooner we will reach the summit. Yet look at what is clearly happening. The relative strength of the NASDAQ index has been declining since October and is now rapidly declining. The index failed to reach new highs and indeed declined while the DJIA and the S&P reached new highs. Note the mutual-fund index. For months now it has bounced off it' s two-hundred day moving average and entwined itself in the fifty-day moving average. Only the banking sector shows any strength lately; all the others show weakness. Scan the the charts in IBD. More and more of them show declines in sales and earnings. There are more and more of those little downward-pointing triangles. Yet these stocks are going up, going up more on hope than reality. We are now thirty-six months since the last major market peak in February 1994 and just five months from the end of the forty-one month market cycle. Cycles, of course, do not run precisely on schedule. But it is something to consider. Also we are in the seventh year of the decade and just after a presidential election, both historically weak economic situations. Will the boomers, brain-washed into believing in the Holy Grail of dollar-cost averaging, convinced that market-timing is a sin as vile as pedophilia, stick with their high-flying mutual funds? Many of them don't remember the awful bear market of 73-74 when the New York Stock Exchange was ready to close-up the shop and move upstairs. There's nothing like losing money to bring a dose of reality to the situation. Unless they are insane, they will bow out of the market. Unlike we who prefer to invest in individual stocks, mutual-fund investors cannot sell the part of the fund that has the lousy stocks and keep the part with the good stocks; they must sell all of it. So don't sell all of your stocks now. Just keep your winners and sell weak ones. Normal portfolio grooming should keep you in good shape for the time that the market reeks with ursine breath. I think the odds favor a significant market decline. Douglas Herman. ------------------------------ End of canslim Digest V1 #92 **************************** To subscribe to canslim Digest, send the command: subscribe canslim-digest in the body of a message to "majordomo@xmission.com". 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