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Author: kahunacfa Big funky green star, 20000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 1933  
Subject: Sycamore Networks - Classic G&D pick Date: 2/23/2006 9:02 PM
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Late last year I was interested in finding some undervalued stocks to potentially buy. Since the telecommunications industry had been depressed, especially the fiber-optic sector, I went to the local Library to browse through their copy of the Value Line Investment Survey. Two companies attracted my attention: Sycamore Networks (SCMR) and Tell Labs (TLAB). Upon looking closer at these two companies, I decided to concentrate on Sycamore Networks.

Two items about the Sycamore Networks report immediately piqued my interest. The report said that an Investment Banking firm, Morgan Stanley had been retained by the Board of Directors to "enhance shareholder returns". The second item was that, although Sycamore Networks had not been profitable for many quarters, the company had more than ample cash - $3.45 per share, in fact. There was no debt. The shares of Sycamore Networks were trading for between $3.30 - $3.35 per share. I sent for the company's Investor Information package, and reviewed the material when it arrived. After a review, I started buying the stock in my IRA for between $3.30 and $3.35 because my research convinced me that the company could be profitable within six to nine months. To my pleasant surprise, the company actually made a small profit in their last reported quarter. Sycamore now has $3.46 per share of cash, and closed today, 23 February 2006 at $4.75. I plan to continue to hold the stock for my normal three to five years with my price objective being in the $10 - $12 per share range sometime during my projected holding period of 2008 - 2010.

Kahuna,CFA
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