From: owner-canslim-digest@lists.xmission.com (canslim-digest) To: canslim-digest@lists.xmission.com Subject: canslim-digest V2 #2822 Reply-To: canslim Sender: owner-canslim-digest@lists.xmission.com Errors-To: owner-canslim-digest@lists.xmission.com Precedence: bulk Content-Transfer-Encoding: quoted-printable X-No-Archive: yes canslim-digest Sunday, August 18 2002 Volume 02 : Number 2822 In this issue: Re: [CANSLIM] David Ryan [CANSLIM] WON quotes [CANSLIM] Case Study Re: [CANSLIM] Case Study RE: [CANSLIM] David Ryan Re: [CANSLIM] Case Study Re: [CANSLIM] Case Study ---------------------------------------------------------------------- Date: Sun, 18 Aug 2002 10:06:31 -0400 From: "Tom Worley" Subject: Re: [CANSLIM] David Ryan This is a multi-part message in MIME format. - ------=_NextPart_000_013B_01C2469E.ED3A1920 Content-Type: text/plain; charset="iso-8859-1" Content-Transfer-Encoding: quoted-printable I was watching the fund fairly closely at the time, as I had put a = number of clients into it that wanted to do CANSLIM, but were = uncomfortable with individual stocks. I saw several factors, not the least of which was the authorized = structure of the fund. The fund could not short, but could be as much as 50% cash. Ryan stayed = in cash to the max during several critical rallies, and got left behind. I worked at the time for a broker dealer where we paid for live picks = from WON and his team. I felt Ryan was diverging from what I was seeing = from WON, who was leaning more towards larger cap stocks, and being = fully invested. Ryan didn't seem to believe the market was going to move = higher, held cash (rather than invest it defensively), and seemed = lukewarm on growth stocks. To me at the time, seemed to be a lack of = confidence and indecision. Ryan's claim to fame was three time winner of a national investing = contest. That is not the same as running a mutual fund. I know I have = learned a lot about managing a mutual fund from my VR Fund. - ----- Original Message -----=20 From: J. Lobatto=20 To: canslim@lists.xmission.com=20 Sent: Sunday, August 18, 2002 9:45 AM Subject: Re: [CANSLIM] David Ryan Tom, Interesting that a guy who was apparently brilliantly successful earlier = failed miserably as a fund manager. Do you think it was a result of = unfavorable market conditions or did he stray from CANSLIM, or was it = something else? ----- Original Message -----=20 From: Tom Worley=20 To: canslim@lists.xmission.com=20 Sent: Sunday, August 18, 2002 9:39 AM Subject: Re: [CANSLIM] David Ryan I heard he and WON parted ways after the mutual fund fell flat on its = face. I think he is still in the industry, but don't know where. Wasn't = impressed with his performance running the fund, nor some of his = decision making, so had no further interest in his performance. ----- Original Message -----=20 From: J. Lobatto=20 To: canslim@lists.xmission.com=20 Sent: Sunday, August 18, 2002 9:33 AM Subject: [CANSLIM] David Ryan Anyone know the whereabouts or whatabouts of David Ryan? I do recall = that he and WON started a mutual fund several years ago that had = mediocre performance and that was bought out by a fund family. Does he = still manage money these days and if so, anyone aware of a track record? Jon - ------=_NextPart_000_013B_01C2469E.ED3A1920 Content-Type: text/html; charset="iso-8859-1" Content-Transfer-Encoding: quoted-printable

I was watching the fund fairly closely at the = time, as I=20 had put a number of clients into it that wanted to do CANSLIM, but were=20 uncomfortable with individual stocks.

I saw several factors, not the least of which = was the=20 authorized structure of the fund.

The fund could not short, but could be as much = as 50%=20 cash. Ryan stayed in cash to the max during several critical = rallies, and=20 got left behind.

I worked at the time for a broker dealer where = we paid for=20 live picks from WON and his team. I felt Ryan was diverging from what I = was=20 seeing from WON, who was leaning more towards larger cap stocks, and = being fully=20 invested. Ryan didn't seem to believe the market was going to move = higher, held=20 cash (rather than invest it defensively), and seemed lukewarm on growth = stocks.=20 To me at the time, seemed to be a lack of confidence and=20 indecision.

Ryan's claim to fame was three time winner of a = national=20 investing contest. That is not the same as running a mutual fund. I know = I have=20 learned a lot about managing a mutual fund from my VR Fund.

----- Original Message -----=20

From: J. = Lobatto=20

To: canslim@lists.xmission.com=

Sent: Sunday, August 18, 2002 9:45 AM

Subject: Re: [CANSLIM] David Ryan

Tom,

Interesting that a guy who was = apparently=20 brilliantly successful earlier failed miserably as a fund manager. Do = you think=20 it was a result of unfavorable market conditions or did he stray from = CANSLIM,=20 or was it something else?

----- Original Message -----
From:=20 Tom=20 Worley
To: canslim@lists.xmission.com=

Sent: Sunday, August 18, 2002 = 9:39=20 AM

Subject: Re: [CANSLIM] David = Ryan

I heard he and WON parted ways after the = mutual fund=20 fell flat on its face. I think he is still in the industry, but don't = know=20 where. Wasn't impressed with his performance running the fund, nor = some of his=20 decision making, so had no further interest in his = performance.

----- Original Message -----=20
From: J. = Lobatto=20

To: canslim@lists.xmission.com=

Sent: Sunday, August 18, 2002 9:33 AM

Subject: [CANSLIM] David Ryan

Anyone know the whereabouts or = whatabouts of=20 David Ryan? I do recall that he and WON started a mutual fund several = years=20 ago that had mediocre performance and that was bought out by a fund = family.=20 Does he still manage money these days and if so, anyone aware of a = track=20 record?

Jon

- ------=_NextPart_000_013B_01C2469E.ED3A1920-- - - - -To subscribe/unsubscribe, email "majordomo@xmission.com" - -In the email body, write "subscribe canslim" or - -"unsubscribe canslim". Do not use quotes in your email. ------------------------------ Date: Sun, 18 Aug 2002 11:35:34 -0400 From: "Ann" Subject: [CANSLIM] WON quotes I thought you all might like to read two quotes from HTMMIS, which I am going to put up on my wall for inspiration: Successful people make many mistakes, but their success is due to hard work, not luck. They just try harder and more often than the average person. There aren't many overnight successes; success takes time. If you get discouraged, don't ever give up. Go back and put in some detailed extra effort. It's always the study and learning time you put in after nine to five, Monday through Friday, that ultimately makes the difference between winning and reaching your goals or missing out on truly great (and profitable!) opportunities. --William J. O'Neil Ann - - - -To subscribe/unsubscribe, email "majordomo@xmission.com" - -In the email body, write "subscribe canslim" or - -"unsubscribe canslim". Do not use quotes in your email. ------------------------------ Date: Sun, 18 Aug 2002 11:12:46 -0500 From: "Katherine Malm" Subject: [CANSLIM] Case Study This is a multi-part message in MIME format. - ------=_NextPart_000_0105_01C246A8.2E0450C0 Content-Type: text/plain; charset="iso-8859-1" Content-Transfer-Encoding: quoted-printable Hi All, Just thought I'd pass on a recent example that demonstrates the = following points: (1) Fundamental screening based on past performance doesn't always "tell = the tale" (2) Technicals always lead to the downside (3) It pays to perform due diligence (4) Never be tempted to enter a stock while it is still basing Here are the stats aside from the technical condition: EPS =3D 92, SMR =3D A, EPS Growth rate (historical) =3D 61%, Composite = rating =3D 82, ROE =3D 21%, Debt =3D 0%. Sounds good, doesn't it? Now, take a look at a chart of PLMD. When you're finished, read this passage excerpted from their 10Q filed = this week: Item 13 Under "Notes to Consolidated Financial Statements" (Highlighting = is mine) . ... The regulations that govern Medicare reimbursement are complex and = our compliance with those regulations may be reviewed by federal = agencies, including the Department of Health and Human Services, the = Department of Justice ("DOJ"), and the Food and Drug Administration = ("FDA"). The U.S. Attorney's Office for the Southern District of = Florida, with the assistance of the Federal Bureau of Investigation = ("FBI") and Department of Health & Human Services' Office of Inspector = General ("OIG"), is investigating allegations of healthcare fraud, = improper revenue recognition and obstruction of justice by PolyMedica. = Both civil and criminal investigations are being conducted. We are = cooperating with the investigations. We cannot accurately predict the = outcome of these proceedings at this time, and have therefore not = recorded any charges relating to their outcome.=20 We and three individuals who are or were officers are defendants in a = lawsuit alleging violations of certain sections and rules of the = Securities Exchange Act of 1934 (the "Exchange Act"). In addition, there = is a derivative action against the directors and two individuals who are = or were officers in Massachusetts state court alleging certain breaches = of fiduciary duty. We, the named individuals, and the Board of Directors = believe that we have meritorious defenses to the claims made against us = in the actions in which we are defendants and intend to contest the = claims vigorously. Although we do not consider an unfavorable outcome to = the various claims probable, we cannot accurately predict their ultimate = disposition, and have therefore not recorded any charges related to = their outcome. An unfavorable outcome could have a material effect on = our financial position and results of operations. Please see Item 1 of = Part II, Legal Proceedings, for a more complete description of these = claims.=20 If any of these investigations results in a determination that we have = failed to comply with the regulations governing Medicare reimbursement = or financial reporting or have otherwise committed healthcare fraud or = securities law violations, we could be subject to delays or loss of = reimbursement, substantial fines or penalties, and other sanctions. An = adverse determination could have a material effect on our financial = position and results of operations.=20 (ref: = http://www.edgar-online.com/bin/edgardoc/finSys_main.asp?dcn=3D0000950135= - -02-003770) Add to that a sudden resignation of their CEO at the beginning of the = month. - --Katherine - ------=_NextPart_000_0105_01C246A8.2E0450C0 Content-Type: text/html; charset="iso-8859-1" Content-Transfer-Encoding: quoted-printable

Hi All,

Just thought I'd pass on a recent example that demonstrates the = following=20 points:

(1) Fundamental screening based on past performance doesn't always = "tell=20 the tale"

(2) Technicals always lead to the downside

(3) It pays to perform due diligence

(4) Never be tempted to enter a stock while it is still = basing

Here are the stats aside from the technical condition:

EPS =3D 92, SMR =3D A, EPS Growth rate (historical) =3D 61%, = Composite rating =3D=20 82, ROE =3D 21%, Debt =3D 0%.

Sounds good, doesn't it? Now, take a look at a chart of PLMD.

When you're finished, read this passage excerpted from their 10Q = filed this=20 week:

Item 13 Under "Notes to Consolidated Financial Statements" = (Highlighting is=20 mine)

. ... The regulations that govern Medicare reimbursement are = complex and=20 our compliance with those regulations may be reviewed by federal = agencies,=20 including the Department of Health and Human Services, the Department of = Justice=20 ("DOJ"), and the Food and Drug Administration ("FDA"). The U.S. = Attorney's=20 Office for the Southern District of Florida, with the assistance of the = Federal=20 Bureau of Investigation ("FBI") and Department of Health & Human = Services'=20 Office of Inspector General ("OIG"), is = investigating=20 allegations of healthcare fraud, improper revenue recognition and = obstruction of=20 justice by PolyMedica. Both civil and criminal investigations are being=20 conducted. We are cooperating with the investigations. We = cannot=20 accurately predict the outcome of these proceedings at this time, and = have=20 therefore not recorded any charges relating to their outcome.=20

We and three individuals who are or were = officers are=20 defendants in a lawsuit alleging violations of certain sections and = rules of the=20 Securities Exchange Act of 1934 (the "Exchange Act"). In addition, there = is a=20 derivative action against the directors and two individuals who are or = were=20 officers in Massachusetts state court alleging certain breaches of = fiduciary=20 duty. We, the named individuals, and the Board of Directors = believe=20 that we have meritorious defenses to the claims made against us in the = actions=20 in which we are defendants and intend to contest the claims vigorously. = Although=20 we do not consider an unfavorable outcome to the various claims = probable, we=20 cannot accurately predict their ultimate disposition, and have therefore = not=20 recorded any charges related to their outcome. An unfavorable outcome = could have=20 a material effect on our financial position and results of operations. = Please=20 see Item 1 of Part II, Legal Proceedings, for a more complete = description of=20 these claims.=20

If any of these investigations results in a = determination that we have failed to comply with the regulations = governing=20 Medicare reimbursement or financial reporting or have otherwise = committed=20 healthcare fraud or securities law violations, we could be subject to = delays or=20 loss of reimbursement, substantial fines or penalties, and other = sanctions. An=20 adverse determination could have a material effect on our financial = position and=20 results of operations.

(ref: http://www.edgar-online.com/bin/edgardoc/finSys_main.= asp?dcn=3D0000950135-02-003770)

Add to that a sudden resignation of their CEO at the beginning of the = month.

--Katherine

- ------=_NextPart_000_0105_01C246A8.2E0450C0-- - - - -To subscribe/unsubscribe, email "majordomo@xmission.com" - -In the email body, write "subscribe canslim" or - -"unsubscribe canslim". Do not use quotes in your email. ------------------------------ Date: Sun, 18 Aug 2002 12:14:30 -0500 From: "Norman" Subject: Re: [CANSLIM] Case Study Crimony! They got more troubles than freshmen at a fraternity hazing I guess no one noticed anything amiss on April 8th; what a spike! Norm - ----- Original Message ----- From: "Katherine Malm" To: Sent: Sunday, August 18, 2002 11:12 AM Subject: [CANSLIM] Case Study Hi All, Just thought I'd pass on a recent example that demonstrates the following points: (1) Fundamental screening based on past performance doesn't always "tell the tale" (2) Technicals always lead to the downside (3) It pays to perform due diligence (4) Never be tempted to enter a stock while it is still basing Here are the stats aside from the technical condition: EPS = 92, SMR = A, EPS Growth rate (historical) = 61%, Composite rating = 82, ROE = 21%, Debt = 0%. Sounds good, doesn't it? Now, take a look at a chart of PLMD. When you're finished, read this passage excerpted from their 10Q filed this week: Item 13 Under "Notes to Consolidated Financial Statements" (Highlighting is mine) . ... The regulations that govern Medicare reimbursement are complex and our compliance with those regulations may be reviewed by federal agencies, including the Department of Health and Human Services, the Department of Justice ("DOJ"), and the Food and Drug Administration ("FDA"). The U.S. Attorney's Office for the Southern District of Florida, with the assistance of the Federal Bureau of Investigation ("FBI") and Department of Health & Human Services' Office of Inspector General ("OIG"), is investigating allegations of healthcare fraud, improper revenue recognition and obstruction of justice by PolyMedica. Both civil and criminal investigations are being conducted. We are cooperating with the investigations. We cannot accurately predict the outcome of these proceedings at this time, and have therefore not recorded any charges relating to their outcome. We and three individuals who are or were officers are defendants in a lawsuit alleging violations of certain sections and rules of the Securities Exchange Act of 1934 (the "Exchange Act"). In addition, there is a derivative action against the directors and two individuals who are or were officers in Massachusetts state court alleging certain breaches of fiduciary duty. We, the named individuals, and the Board of Directors believe that we have meritorious defenses to the claims made against us in the actions in which we are defendants and intend to contest the claims vigorously. Although we do not consider an unfavorable outcome to the various claims probable, we cannot accurately predict their ultimate disposition, and have therefore not recorded any charges related to their outcome. An unfavorable outcome could have a material effect on our financial position and results of operations. Please see Item 1 of Part II, Legal Proceedings, for a more complete description of these claims. If any of these investigations results in a determination that we have failed to comply with the regulations governing Medicare reimbursement or financial reporting or have otherwise committed healthcare fraud or securities law violations, we could be subject to delays or loss of reimbursement, substantial fines or penalties, and other sanctions. An adverse determination could have a material effect on our financial position and results of operations. (ref: http://www.edgar-online.com/bin/edgardoc/finSys_main.asp?dcn=0000950135-02-0 03770) Add to that a sudden resignation of their CEO at the beginning of the month. - --Katherine - - - -To subscribe/unsubscribe, email "majordomo@xmission.com" - -In the email body, write "subscribe canslim" or - -"unsubscribe canslim". Do not use quotes in your email. ------------------------------ Date: Sun, 18 Aug 2002 11:38:08 -0700 From: "Walter Wittesch" Subject: RE: [CANSLIM] David Ryan This is a multi-part message in MIME format. - ------=_NextPart_000_0000_01C246AB.B9B209C0 Content-Type: text/plain; charset="iso-8859-1" Content-Transfer-Encoding: 7bit Ryan Capital Management 100 Wilshire Blvd Santa Monica, CA 90401-1110 Phone (310) 260-6805 -----Original Message----- From: owner-canslim@lists.xmission.com [mailto:owner-canslim@lists.xmission.com]On Behalf Of J. Lobatto Sent: Sunday, August 18, 2002 6:33 AM To: canslim@lists.xmission.com Subject: [CANSLIM] David Ryan Anyone know the whereabouts or whatabouts of David Ryan? I do recall that he and WON started a mutual fund several years ago that had mediocre performance and that was bought out by a fund family. Does he still manage money these days and if so, anyone aware of a track record? Jon - ------=_NextPart_000_0000_01C246AB.B9B209C0 Content-Type: text/html; charset="iso-8859-1" Content-Transfer-Encoding: quoted-printable

Ryan=20 Capital Management

100=20 Wilshire Blvd

Santa=20 Monica, CA 90401-1110

Phone=20 (310) 260-6805

-----Original Message-----
From:=20 owner-canslim@lists.xmission.com=20 [mailto:owner-canslim@lists.xmission.com]On Behalf Of J.=20 Lobatto
Sent: Sunday, August 18, 2002 6:33 AM
To:=20 canslim@lists.xmission.com
Subject: [CANSLIM] David=20 Ryan

Anyone know the whereabouts or = whatabouts of=20 David Ryan? I do recall that he and WON started a mutual fund several = years=20 ago that had mediocre performance and that was bought out by a fund = family.=20 Does he still manage money these days and if so, anyone aware of a = track=20 record?

Jon

- ------=_NextPart_000_0000_01C246AB.B9B209C0-- - - - -To subscribe/unsubscribe, email "majordomo@xmission.com" - -In the email body, write "subscribe canslim" or - -"unsubscribe canslim". Do not use quotes in your email. ------------------------------ Date: Sun, 18 Aug 2002 14:56:18 -0400 From: "Tom Worley" Subject: Re: [CANSLIM] Case Study This is a multi-part message in MIME format. - ------=_NextPart_000_016D_01C246C7.689A63E0 Content-Type: text/plain; charset="iso-8859-1" Content-Transfer-Encoding: quoted-printable I completely agree, Katherine, Due Diligence should always be a = necessary part of evaluating a stock prior to entry. On the other hand, = the SEC filings for 10Q and 10K must also spell out every possible = hazard and risk, much like a prospectus for an offering. What is not = mentioned here is that the SEC already investigated its financials, and = in April closed the investigation recommending no action.=20 So while there does appear to be a lot of smoke here, don't know if = there is a real fire. I think the confused chart shows that investors = don't know either, which is reason enough to stay away. In past filings, they indicated that it was their subsidiary Liberty = Medical Supply, located in Florida and targeting senior citizens with = diabetes, as the subject of the investigation. Don't know if it expanded = to the entire Polymedica corp now. - ----- Original Message -----=20 From: Katherine Malm=20 To: canslim@lists.xmission.com=20 Sent: Sunday, August 18, 2002 12:12 PM Subject: [CANSLIM] Case Study Hi All, Just thought I'd pass on a recent example that demonstrates the = following points: (1) Fundamental screening based on past performance doesn't always "tell = the tale" (2) Technicals always lead to the downside (3) It pays to perform due diligence (4) Never be tempted to enter a stock while it is still basing Here are the stats aside from the technical condition: EPS =3D 92, SMR =3D A, EPS Growth rate (historical) =3D 61%, Composite = rating =3D 82, ROE =3D 21%, Debt =3D 0%. Sounds good, doesn't it? Now, take a look at a chart of PLMD. When you're finished, read this passage excerpted from their 10Q filed = this week: Item 13 Under "Notes to Consolidated Financial Statements" (Highlighting = is mine)=20 . ... The regulations that govern Medicare reimbursement are complex and = our compliance with those regulations may be reviewed by federal = agencies, including the Department of Health and Human Services, the = Department of Justice ("DOJ"), and the Food and Drug Administration = ("FDA"). The U.S. Attorney's Office for the Southern District of = Florida, with the assistance of the Federal Bureau of Investigation = ("FBI") and Department of Health & Human Services' Office of Inspector = General ("OIG"), is investigating allegations of healthcare fraud, = improper revenue recognition and obstruction of justice by PolyMedica. = Both civil and criminal investigations are being conducted. We are = cooperating with the investigations. We cannot accurately predict the = outcome of these proceedings at this time, and have therefore not = recorded any charges relating to their outcome.=20 We and three individuals who are or were officers are defendants in a = lawsuit alleging violations of certain sections and rules of the = Securities Exchange Act of 1934 (the "Exchange Act"). In addition, there = is a derivative action against the directors and two individuals who are = or were officers in Massachusetts state court alleging certain breaches = of fiduciary duty. We, the named individuals, and the Board of Directors = believe that we have meritorious defenses to the claims made against us = in the actions in which we are defendants and intend to contest the = claims vigorously. Although we do not consider an unfavorable outcome to = the various claims probable, we cannot accurately predict their ultimate = disposition, and have therefore not recorded any charges related to = their outcome. An unfavorable outcome could have a material effect on = our financial position and results of operations. Please see Item 1 of = Part II, Legal Proceedings, for a more complete description of these = claims.=20 If any of these investigations results in a determination that we have = failed to comply with the regulations governing Medicare reimbursement = or financial reporting or have otherwise committed healthcare fraud or = securities law violations, we could be subject to delays or loss of = reimbursement, substantial fines or penalties, and other sanctions. An = adverse determination could have a material effect on our financial = position and results of operations.=20 (ref: = http://www.edgar-online.com/bin/edgardoc/finSys_main.asp?dcn=3D0000950135= - -02-003770)=20 Add to that a sudden resignation of their CEO at the beginning of the = month.=20 - --Katherine - ------=_NextPart_000_016D_01C246C7.689A63E0 Content-Type: text/html; charset="iso-8859-1" Content-Transfer-Encoding: quoted-printable

I completely agree, Katherine, Due Diligence = should always=20 be a necessary part of evaluating a stock prior to entry. On the other = hand, the=20 SEC filings for 10Q and 10K must also spell out every possible hazard = and risk,=20 much like a prospectus for an offering. What is not mentioned here is = that the=20 SEC already investigated its financials, and in April closed the = investigation=20 recommending no action.

So while there does appear to be a lot of smoke = here,=20 don't know if there is a real fire. I think the confused chart shows = that=20 investors don't know either, which is reason enough to stay = away.

In past filings, they indicated that it was = their=20 subsidiary Liberty Medical Supply, located in Florida and targeting = senior=20 citizens with diabetes, as the subject of the investigation. Don't know = if it=20 expanded to the entire Polymedica corp now.

----- Original Message -----=20

From: Katherine Malm=20

To: canslim@lists.xmission.com=

Sent: Sunday, August 18, 2002 12:12 PM

Subject: [CANSLIM] Case Study

Hi All,

Just thought I'd pass on a recent example that demonstrates the = following=20 points:

(1) Fundamental screening based on past performance doesn't always = "tell=20 the tale"

(2) Technicals always lead to the downside

(3) It pays to perform due diligence

(4) Never be tempted to enter a stock while it is still = basing

Here are the stats aside from the technical condition:

EPS =3D 92, SMR =3D A, EPS Growth rate (historical) =3D 61%, = Composite rating =3D=20 82, ROE =3D 21%, Debt =3D 0%.

Sounds good, doesn't it? Now, take a look at a chart of PLMD.

When you're finished, read this passage excerpted from their 10Q = filed this=20 week:

Item 13 Under "Notes to Consolidated Financial Statements" = (Highlighting is=20 mine)=20

(ref: http://www.edgar-online.com/bin/edgardoc/finSys_main.= asp?dcn=3D0000950135-02-003770)=20

Add to that a sudden resignation of their CEO at the beginning of the = month.=20

--Katherine

- ------=_NextPart_000_016D_01C246C7.689A63E0-- - - - -To subscribe/unsubscribe, email "majordomo@xmission.com" - -In the email body, write "subscribe canslim" or - -"unsubscribe canslim". Do not use quotes in your email. ------------------------------ Date: Sun, 18 Aug 2002 14:13:23 -0500 From: "Katherine Malm" Subject: Re: [CANSLIM] Case Study This is a multi-part message in MIME format. - ------=_NextPart_000_0159_01C246C1.69C5D340 Content-Type: text/plain; charset="iso-8859-1" Content-Transfer-Encoding: quoted-printable Tom, Take another look. The charges as outlined in the SEC filing also speak = to criminal/civil charges. This is distinct from any SEC investigation. Katherine ----- Original Message -----=20 From: Tom Worley=20 To: canslim@lists.xmission.com=20 Sent: Sunday, August 18, 2002 1:56 PM Subject: Re: [CANSLIM] Case Study I completely agree, Katherine, Due Diligence should always be a = necessary part of evaluating a stock prior to entry. On the other hand, = the SEC filings for 10Q and 10K must also spell out every possible = hazard and risk, much like a prospectus for an offering. What is not = mentioned here is that the SEC already investigated its financials, and = in April closed the investigation recommending no action.=20 So while there does appear to be a lot of smoke here, don't know if = there is a real fire. I think the confused chart shows that investors = don't know either, which is reason enough to stay away. In past filings, they indicated that it was their subsidiary Liberty = Medical Supply, located in Florida and targeting senior citizens with = diabetes, as the subject of the investigation. Don't know if it expanded = to the entire Polymedica corp now. ----- Original Message -----=20 From: Katherine Malm=20 To: canslim@lists.xmission.com=20 Sent: Sunday, August 18, 2002 12:12 PM Subject: [CANSLIM] Case Study Hi All, Just thought I'd pass on a recent example that demonstrates the = following points: (1) Fundamental screening based on past performance doesn't always = "tell the tale" (2) Technicals always lead to the downside (3) It pays to perform due diligence (4) Never be tempted to enter a stock while it is still basing Here are the stats aside from the technical condition: EPS =3D 92, SMR =3D A, EPS Growth rate (historical) =3D 61%, Composite = rating =3D 82, ROE =3D 21%, Debt =3D 0%. Sounds good, doesn't it? Now, take a look at a chart of PLMD. When you're finished, read this passage excerpted from their 10Q filed = this week: Item 13 Under "Notes to Consolidated Financial Statements" = (Highlighting is mine)=20 . ... The regulations that govern Medicare reimbursement are complex = and our compliance with those regulations may be reviewed by federal = agencies, including the Department of Health and Human Services, the = Department of Justice ("DOJ"), and the Food and Drug Administration = ("FDA"). The U.S. Attorney's Office for the Southern District of = Florida, with the assistance of the Federal Bureau of Investigation = ("FBI") and Department of Health & Human Services' Office of Inspector = General ("OIG"), is investigating allegations of healthcare fraud, = improper revenue recognition and obstruction of justice by PolyMedica. = Both civil and criminal investigations are being conducted. We are = cooperating with the investigations. We cannot accurately predict the = outcome of these proceedings at this time, and have therefore not = recorded any charges relating to their outcome.=20 We and three individuals who are or were officers are defendants in a = lawsuit alleging violations of certain sections and rules of the = Securities Exchange Act of 1934 (the "Exchange Act"). In addition, there = is a derivative action against the directors and two individuals who are = or were officers in Massachusetts state court alleging certain breaches = of fiduciary duty. We, the named individuals, and the Board of Directors = believe that we have meritorious defenses to the claims made against us = in the actions in which we are defendants and intend to contest the = claims vigorously. Although we do not consider an unfavorable outcome to = the various claims probable, we cannot accurately predict their ultimate = disposition, and have therefore not recorded any charges related to = their outcome. An unfavorable outcome could have a material effect on = our financial position and results of operations. Please see Item 1 of = Part II, Legal Proceedings, for a more complete description of these = claims.=20 If any of these investigations results in a determination that we have = failed to comply with the regulations governing Medicare reimbursement = or financial reporting or have otherwise committed healthcare fraud or = securities law violations, we could be subject to delays or loss of = reimbursement, substantial fines or penalties, and other sanctions. An = adverse determination could have a material effect on our financial = position and results of operations.=20 (ref: = http://www.edgar-online.com/bin/edgardoc/finSys_main.asp?dcn=3D0000950135= - -02-003770)=20 Add to that a sudden resignation of their CEO at the beginning of the = month.=20 --Katherine - ------=_NextPart_000_0159_01C246C1.69C5D340 Content-Type: text/html; charset="iso-8859-1" Content-Transfer-Encoding: quoted-printable

Tom,

Take another look. The charges as outlined in the SEC filing also = speak to=20 criminal/civil charges. This is distinct from any SEC = investigation.

Katherine

----- Original Message -----
From:=20 Tom=20 Worley
To: canslim@lists.xmission.com=

Sent: Sunday, August 18, 2002 = 1:56=20 PM

Subject: Re: [CANSLIM] Case = Study

I completely agree, Katherine, Due Diligence = should=20 always be a necessary part of evaluating a stock prior to entry. On = the other=20 hand, the SEC filings for 10Q and 10K must also spell out every = possible=20 hazard and risk, much like a prospectus for an offering. What is not = mentioned=20 here is that the SEC already investigated its financials, and in April = closed=20 the investigation recommending no action.

So while there does appear to be a lot of = smoke here,=20 don't know if there is a real fire. I think the confused chart shows = that=20 investors don't know either, which is reason enough to stay = away.

In past filings, they indicated that it was = their=20 subsidiary Liberty Medical Supply, located in Florida and targeting = senior=20 citizens with diabetes, as the subject of the investigation. Don't = know if it=20 expanded to the entire Polymedica corp now.

----- Original Message -----=20
From: Katherine Malm=20

To: canslim@lists.xmission.com=

Sent: Sunday, August 18, 2002 12:12 PM

Subject: [CANSLIM] Case Study

Hi All,

Just thought I'd pass on a recent example that demonstrates the = following=20 points:

(1) Fundamental screening based on past performance doesn't = always "tell=20 the tale"

(2) Technicals always lead to the downside

(3) It pays to perform due diligence

(4) Never be tempted to enter a stock while it is still = basing

Here are the stats aside from the technical condition:

EPS =3D 92, SMR =3D A, EPS Growth rate (historical) =3D 61%, = Composite rating =3D=20 82, ROE =3D 21%, Debt =3D 0%.

Sounds good, doesn't it? Now, take a look at a chart of = PLMD.

When you're finished, read this passage excerpted from their 10Q = filed=20 this week:

Item 13 Under "Notes to Consolidated Financial Statements" = (Highlighting is=20 mine)=20
. ... The regulations that govern Medicare reimbursement are = complex=20 and our compliance with those regulations may be reviewed by federal = agencies,=20 including the Department of Health and Human Services, the Department = of=20 Justice ("DOJ"), and the Food and Drug Administration ("FDA"). The = U.S.=20 Attorney's Office for the Southern District of Florida, with the = assistance of=20 the Federal Bureau of Investigation ("FBI") and Department of Health = &=20 Human Services' Office of Inspector General ("OIG"), is investigating allegations of healthcare fraud, = improper=20 revenue recognition and obstruction of justice by PolyMedica. Both = civil and=20 criminal investigations are being conducted. We are = cooperating=20 with the investigations. We cannot accurately predict the outcome of = these=20 proceedings at this time, and have therefore not recorded any charges = relating=20 to their outcome.=20
We and three individuals who are or were = officers=20 are defendants in a lawsuit alleging violations of certain sections = and rules=20 of the Securities Exchange Act of 1934 (the "Exchange Act"). In = addition,=20 there is a derivative action against the directors and two individuals = who are=20 or were officers in Massachusetts state court alleging certain = breaches of=20 fiduciary duty. We, the named individuals, and the Board = of=20 Directors believe that we have meritorious defenses to the claims made = against=20 us in the actions in which we are defendants and intend to contest the = claims=20 vigorously. Although we do not consider an unfavorable outcome to the = various=20 claims probable, we cannot accurately predict their ultimate = disposition, and=20 have therefore not recorded any charges related to their outcome. An=20 unfavorable outcome could have a material effect on our financial = position and=20 results of operations. Please see Item 1 of Part II, Legal = Proceedings, for a=20 more complete description of these claims.=20
If any of these investigations results in = a=20 determination that we have failed to comply with the regulations = governing=20 Medicare reimbursement or financial reporting or have otherwise = committed=20 healthcare fraud or securities law violations, we could be subject to = delays=20 or loss of reimbursement, substantial fines or penalties, and other = sanctions.=20 An adverse determination could have a material effect on our financial = position and results of operations.
(ref: http://www.edgar-online.com/bin/edgardoc/finSys_main.= asp?dcn=3D0000950135-02-003770)=20
Add to that a sudden resignation of their CEO at the beginning of = the=20 month.=20
--Katherine

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