RE: [CANSLIM] MGAM - Another conventional wisdom question

From: "Tom Johnson" <tjohnson@covad.net>
Subject: RE: [CANSLIM] MGAM - Another conventional wisdom question
Date: Tue, 2 Apr 2002 17:49:29 -0800

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Steve,

Just an observation about announcements of stock sales.

The intent of MGAM to issue 2.8 million new shares to the 12.19 million
outstanding represents about a 23% dilution for its shares.  If the
pre-announcement market capitalization of the firm was about $423 million,
and nothing else announced today changes the expected future earnings
stream, then the shares would theoretically drop 23% to offset that same
increase in outstanding shares.  Indeed it dropped less than 9%, meaning it
had a great day and/or was announced late enough that many have not sold
yet.

The CEO's additional authorization to sell 200,000 of his personal shares
would represent further downward pressure equivalent to today's whole volume
in that stock.  MGAM may place all these shares through institutions
(presently 64 institutions own 57% of the outstanding shares) and brokers
which will entail some greater visibility (presently only 2 analysts follow
this company).

I'd offer that you should adjust your stop down so you do not get stopped
out as the company is just as strong as it was fundamentally and no
technical weakness.

Tom Johnson

- -----Original Message-----
From: owner-canslim@lists.xmission.com
[mailto:owner-canslim@lists.xmission.com]On Behalf Of Tom Worley
Sent: Tuesday, April 02, 2002 4:48 PM
To: canslim@lists.xmission.com
Subject: Re: [CANSLIM] MGAM - Another conventional wisdom question


Steve, I am regularly amazed at the number of stocks I see where inside
information obviously leaked before being made publicly available, yet I see
little enforcement action by the SEC. While today was an overall ugly day, I
would agree that the drop was at least caused by this news, as it is the
kind of news that induces selling.

I have seen some stocks in past months able to rebound back from this type
of news, largely seems to depend on whether they have institutional support
and/or whether it will be institutions that will take down this offering. If
the latter, they will support it at some price, but only they know the
price.

The lack of volume today may be of some encouragement, but if you can place
a hard stop, and don't already have one in place, I would do so tonight.

Tom Worley
stkguru@bellsouth.net
AIM: TexWorley
- ----- Original Message -----
From: "Steve F" <stevepdv@yahoo.com>
To: <canslim@lists.xmission.com>
Sent: Tuesday, April 02, 2002 6:27 PM
Subject: [CANSLIM] MGAM - Another conventional wisdom question


Mgam dropped 9% today and after the close there was an
announcement that the company is issuing an additional
2.8 million shares.  I am assuming the drop was
related to the announcement even though the drop came
before the news.

Hang on or run ??.....Still not at my stop price

Thanks
Steve

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