Prime Stock Advisory Letter for November 2nd, 1998

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Position Statement: In our Prime Recommendation Letter we attempt to identify the recommendation with the highest probability of moving higher.  We recommend that stop orders be placed at the time of purchase,  and once the position has moved profitable we recommend a stop be placed a minimum of 3/8th above the purchase price and moved higher as the position moves higher.

Today's Comments:  The overall market moved sharply higher on Friday.  The S&P 500 Index 'SPX' broke above its downward trendline that has been in place since mid April of this year.  This is significant because it removes the immediate downside pressure that had been on the overall market.  It looks as if a broad based market rally is underway that will continue for the time being.  Currently I do not see anything negative on the political or economic horizon that would bring the current market rally to an end.  But,  the upcoming election on Tuesday has the potential to provide an unexpected surprise that could affect the market.  I am not attempting to predict the election based upon the market or vise versa.  The rally on Friday was broad based and affected all the sector indices I track.  The Bottom Line:  The overall market should move higher.
 

Company:  Greg Manning Auctions          Symbol: 'GMAI'       Closing Price: $3.78/share.
YH: $4.25     YL: $1.125         EPS: $0.06    P/E: 63.0     Forecasted EPS: N/A
Dividend: N/A      Yield:  N/A       Ex Dividend: N/A
Price Target:  $7.00 & then $10.00   Downside Stop:  $2.125
Options Recommendation:  None Available. 

Company Description: This company auctions stamps and other collectable items.  On Friday it acquired Teletrade,  an Internet auction house.

Recent News:  10/30  Greg Manning Auctions acquires Teletrade.
10/26  Greg Manning Auction 1st qtr net $0.04 vs. loss of $0.07/share.
9/28  Greg Manning Auctions 4th qtr. net $0.13/share vs $0.02/share

Our Analysis: This company auctions stamps, and other collectible items.  On Friday,  Greg Manning Auctions acquired Teletrade, an Internet auction house.  This makes 'GMAI' the third publicly traded auction house utilizing the Internet.  What separates 'GMAI' from Ebay and On-Sale is that "GMAI' has a physical auction operation that can compliment and provide a large amount of synergy to the Internet auction site and vise versa.  Teletrade had 1997 sales of approximately $21 million dollars,  this combined with the $22 million in sales that 'GMAI' did in its latest fiscal year place it in the same sales range as Ebay.  I feel that "GMAI' is very undervalued when compared to Ebay and On-Sale.  Ebay currently has a market capitalization of over $3.2 billion,  On-Sale has a market capitalization of $340 million,  and "GMAI' has a market capitalization of less than $28 million dollars.  I am looking for the shares of 'GMAI' to make a significant move to the upside due to this acquisition.  

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