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Enron Mail |
If you are reading this message in plaintext or if you have an AOL address = you must click on this link: http://www.smallcapnetwork.net/archive/listser= v/20020130-1.html and wait for a web page to automatically open up to prop= erly read this newsletter.=20 [IMAGE] =09 [IMAGE] Dow Jones [IMAGE] 9762.86 + 144.62 6:08 pm EST, Wed., January 30,= 2002 [IMAGE] NASDAQ [IMAGE] 1913.44 + 20.45 For info, visit www.smallcap= network.net . [IMAGE] S & P 500 [IMAGE] 1113.23 + 12.59 To be removed, p= lease click here . [IMAGE] Russell 2000 [IMAGE] 479.72 + 5.74 VOLUME 0= 2: ISSUE 9 =09 [IMAGE]=09 Reaching The Breaking Point Is anyone else sick and tired of the financi= al "scandals" being harked by the media? Companies are blaming auditors wh= ile auditors are blaming Wall Street and Wall Street is blaming everybody. = Members of Congress are jumping on the bandwagon denouncing the companies.= These are the same companies that helped finance their campaigns. This d= rama is starting to resemble the Jerry Springer show and it is doing harm t= o investors' faith in the market. Publicly traded companies are expected t= o conduct themselves in a respectable manner. This means no shredding of d= ocuments and no actions of management that undermine the integrity of the c= ompany. Is it too much to ask for? In just the past few weeks we have ha= d some high profile cases. [IMAGE]ImClone Systems (IMCL ) is being inves= tigated by the SEC and the Justice Department. The company is accused of m= isleading investors of a highly touted colon cancer drug called Erbitux. CE= O Samuel Waksal told investors on a conference call that he was "stunned'' = at the FDA's decision to refuse the cancer drug application for Erbitux. Ho= wever a copy of the FDA's rejection letter was obtained by The Cancer Lette= r. It suggests Waksal and his brother Harlan knew, or should have known, th= at the FDA had serious concerns about the way the company conducted a key c= linical trial. To add fuel to the fire, Harlan Waksal filed a Form 144 wit= h the SEC on Dec. 6 to sell 700,000 shares of ImClone stock. At the time o= f the filing the stock was at its 52-week high of $75. Call it coincidence= if you will but investors feel cheated. [IMAGE] Global Cros= sing (GX ) filed for bankruptcy this Monday. Company Chairman Gary Winnick= was a former Drexel Burnham Lambert sales executive that joined the junk b= ond business in 1972 and left in 1985 which was five years prior to the fir= ms collapse. It is somewhat ironic that Global Crossing's inability to pay= off its debt caused the company to fall. Unfortunately for GX, Drexel isn= 't around anymore. There is a winner in all this and that is the Winnick. = He started the company with a little over $20 million investment and over = the last three years he has managed to sell over $600 million worth of stoc= k. [IMAGE] Tyco (TYC ) has always had bears scrutinizing over the co= mpany's accounting. The Enron collapse prompted the company to announce a = breakup into four units which would "maximize shareholder value". It seeme= d like a defensive move and the market responded by selling the stock. The= n some troubles hit when it was revealed the company paid $10 million to ou= tside director Frank Walsh and an additional $10 million to a charity of wh= ich he is a trustee. This prompted another sell off. In this environment, = anything that even hints at impropriety will cause investors to jump ship. = [IMAGE] Anadarko Petroleum Corp. (APC ) fell as much as 7.= 4 percent on Wednesday after the largest U.S. independent oil and gas produ= cer said it restated third-quarter earnings to include an additional $1.7 b= illion in charges to reflect lower values for its U.S. oil and gas assets. = The problem was that the accountants had used the wrong figures to calcula= te the worth of some of the company's U.S. energy properties. Brownie poin= ts go to Anadarko for correcting the error but you have to wonder if manage= ment would've been so swift if it not for Enron. It may be painful now bu= t good will come out of all this. Companies will face intense scrutiny when= they report their earnings. Stocks may be hurt in the near term but overa= ll there will be a shift to a higher quality of reporting. The companies= listed above are predominantly large corporations and cover four different= industries. The problems are in no way relegated to a certain industry. = The bottom line is huge consulting fees are paid by big companies. This i= n turn creates a greater incentive for the accounting side to make sure the= ir clients make their numbers. It is equivalent to an investment bank havi= ng their "analysts" issue a buy rating on a company that does banking deals= with them. With all the turmoil right now many investors are pulling the= ir money out of the markets. A poll by Investors Business Daily showed tha= t 40 out of 50 executives polled believe there are other companies with acc= ounting irregularities. This is frightening but it most certainly does not = mean investors should not buy stocks. On the contrary, there are some very= exciting things happening in the world being made possible by companies th= at are publicly traded. The challenge is finding these companies. Whereas= in the past, investors put their money in the stock market and expected si= gnificant returns, now we are in a market of stocks where it days some seri= ous work to find the winners. Innovation is not going to stop. Can peopl= e afford not to be invested in the future? The SmallCap Digest has always= advocated diversification. This means a well balanced portfolio consistin= g of companies in different sectors with varying market caps. All the trou= bles currently in the market have been mostly isolated to large companies. = Small cap companies are always in a "prove it" mode because they have no= institutional coverage and must win over investors with their performance.= They face more scrutiny, thus making for a less likely chance of "Enroni= tis". In about one week we will be profiling a biotech company that has p= assed our due diligence test. This company is already generating very impr= essive sales and looks to be profitable this year. Coupled with strong ins= titutional backers, a rarity for a company of it's size, this medical devic= e maker is poised to make a big splash when it debuts. The company will be = going public through an RTO, and it will open for trading on the American S= tock Exchange. (Subscribers are encouraged to read our expose on Enron )= =09 D I S C L A I M E R :[IMAGE] The SmallCap Digest is an independent electro= nic publication committed to providing our readers with factual information= on selected publicly traded companies. SmallCap Digest is not a registere= d investment advisor or broker-dealer. All companies are chosen on the basi= s of certain financial analysis and other pertinent criteria with a view to= ward maximizing the upside potential for investors while minimizing the do= wnside risk, whenever possible. Moreover, as detailed below, this publicat= ion accepts compensation from third party consultants and/or companies whic= h it features for the publication and circulation of the SmallCap Digest or= representation on SmallCapNetwork.net. Likewise, this newsletter is owned= by TGR, LLC. To the degrees enumerated herein, this newsletter should no= t be regarded as an independent publication. Click Here to view our comp= ensation on every company we have ever covered, or visit the following web = address: http://www.smallcapdigest.net/compensation_disclosure.html for o= ur full compensation disclosure and http://www.smallcapdigest.net/short_ter= m_alerts.html for Trading Alerts compensation and disclosure. All statem= ents and expressions are the sole opinions of the editors and are subject = to change without notice. A profile, description, or other mention of a com= pany in the newsletter is neither an offer nor solicitation to buy or sell = any securities mentioned. While we believe all sources of information to b= e factual and reliable, in no way do we represent or guarantee the accuracy= thereof, nor the statements made herein. The editor, members of the edit= or's family, and/or entities with which the editor is affiliated, are forb= idden by company policy to own, buy, sell or otherwise trade stock for thei= r own benefit in the companies who appear in the publication. The profiles,= critiques, and other editorial content of the SmallCap Digest and SmallCap= Network.net may contain forward-looking statements relating to the expected= capabilities of the companies mentioned herein. THE READER SHOULD VERIFY= ALL CLAIMS AND DO THEIR OWN DUE DILIGENCE BEFORE INVESTING IN ANY SECURITI= ES MENTIONED. INVESTING IN SECURITIES IS SPECULATIVE AND CARRIES A HIGH DE= GREE OF RISK. THE INFORMATION FOUND IN THIS PROFILE IS PROTECTED BY THE COP= YRIGHT LAWS OF THE UNITED STATES AND MAY NOT BE COPIED, OR REPRODUCED IN AN= Y WAY WITHOUT THE EXPRESSED, WRITTEN CONSENT OF THE EDITORS OF SMALLCAPNET= WORK.NET. We encourage our readers to invest carefully and read the inves= tor information available at the web sites of the Securities and Exchange = Commission ("SEC") at http://www.sec.gov and/or the National Association o= f Securities Dealers ("NASD") at http://www.nasd.com . We also strongly re= commend that you read the SEC advisory to investors concerning Internet Sto= ck Fraud, which can be found at http://www.sec.gov/consumer/cyberfr.htm .= Readers can review all public filings by companies at the SEC's EDGAR page= . The NASD has published information on how to invest carefully at its web = site. =09 --- You are currently subscribed to smallcapdigest as: andrew.h.lewis@enron.com To unsubscribe send a blank email to leave-smallcapdigest-871164Q@lyris.sma= llcapnetwork.net
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