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Author: kahunacfa Big funky green star, 20000 posts 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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Author: stevenjklein Big funky green star, 20000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 1907 of 1933
Subject: Re: Sycamore Networks - Classic G&D pick Date: 2/23/2006 9:28 PM
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I went to the local Library to browse through their copy of the Value Line Investment Survey.

Can you tell us (well, me really) more about Value Line Investment Survey?

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Author: kahunacfa Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 1908 of 1933
Subject: Re: Sycamore Networks - Classic G&D pick Date: 2/23/2006 10:28 PM
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"I went to the local Library to browse through their copy of the Value Line Investment Survey."

Can you tell us (well, me really) more about Value Line Investment Survey? - stevenjklein | Date: 2/23/06 9:28 PM | Number: 1907

The Value Line Investment Survey is a service provided my Value Line in which they write a one page report on most public companies. When I first start to do research on a company, I go to a public library that subscribes to the Value Line service - most do and make a copy of the company's report.

A free Value Line Report on the DOW30 Industrial companies can obtained here: http://www.valueline.com. Look on the lower left portion of the web-page in the brown section where you will find DOW30. Click on that, and a page will come-up with the thirty companies in the DOW30 listed. Click on the company, then on the report and a pdf. copy of the report will be displayed which you can print a free copy.

I generally ignore the rankings on the report, because some of my best investments have had 5-5-5 rankings such as Philip Morris (MO) when I bought 1,000 shares of it for my IRA in the year 2000 at $20.0625 per share. At that price, on the year 2000 dividend MO had a 9.54% dividend yield, tax-free in my IRA. MO closed at $73.38 today, 23 February 2006.

Kahuna,CFA


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Author: budfox100 One star, 50 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 1918 of 1933
Subject: Re: Sycamore Networks - Classic G&D pick Date: 6/9/2006 10:13 AM
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Kahuna,

I just cought this board and have a question for you on this. From a DD standpoint, didn't management's decision to bring in an investment bank to do its job raise some red flags? If so, how did you oversome this in your analysis?

Just curious,

Jason

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Author: wutangfinancial Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 1919 of 1933
Subject: Re: Sycamore Networks - Classic G&D pick Date: 7/5/2006 5:38 PM
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I think I'm going to start a new position in SCMR since its now back below $4...Earnings momentum is actually pretty good even though there's little profit, and their current ratio is still extremely high, yet inventory isn't piling up. I think at below $4, SCMR is an example of a damaged stock and an improving business, an ideal combination. Anyone think I'm missing something?

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