POST OF THE DAY
Level 3 Communications
Annyonghi Kyeseyo

Format for Printing

Format for printing

Request Reprints

Reuse/Reprint

By razorfangius
February 6, 2002

Posts selected for this feature rarely stand alone. They are usually a part of an ongoing thread, and are out of context when presented here. The material should be read in that light. How are these posts selected? Click here to find out and nominate a post yourself!

For anyone who doesn't know I was involved in a dangerous speculation in CRA back in 2000. I had a lot of money (for me) in the stock, and was up by a considerable amount at one point, but when disaster struck I scampered and was able to escape with a small profit.

Fate has not been so kind to me with LVLT. By sheer luck I have managed to avoid the complete destruction my investment strategy so richly deserved. But still, the losses have been not small, and the opportunity costs (as I watch value-oriented friend rack up 20%+ annual gains) have been enormous.

Someone joked about writing a book "Level 3: Value Trap of Death". Well, isn't it? How many people would have bailed if it was Nacchio or Winnick running the show instead of Crowe? How many people would have bailed if Scott wasn't behind the scenes somewhere, allegedly plotting financial strategy with You Know Who?

And how much have people lost -- because they believed in these individuals? I'm not saying Scott or Crowe did anything wrong. On the contrary, the only thing they did wrong was commit to a commodity business that required a huge capital outlay at the same time as everyone else. Given that one mistake, they have performed mostly flawlessly since.

But still ... how much has been lost?

How many people said "I know this is a speculation" and yet averaged down into a money-losing, debt-laden on-the-ropes company because a couple of guys said "trust us, everything will be okay?"

For me the end of the romance came when Crowe said we had six more months of disconnects ahead of us, after claiming otherwise defiantly 3 months earlier. What good does it do to create $100 bills in the palm of your left hand if you destroy them in the palm of your right hand? When is growth not growth? See top of paragraph.

Well, I sold more than half my position at an average of $3.80 after the conference call and am glad I did.

What to do with the rest? Keep it and watch it slide to zero, or sell it to salvage what's left? Well ... what's left is a pittance, of course. I sold 60% and the rest imploded. And I would have to kill myself if I closed out my position, only to watch the stock by some miracle get back to $10 by 2005.

So ... I'll keep what I have. But at this point it's a complete crapshoot. Either they have a rabbit in the hat or they don't, and they aren't telling us. We'll know soon enough.

Again the lesson of case rate versus base rate has been laid out for me and I trust that I understand it this time.

Now it is time for me to say good-bye to this board. Thanks everyone, including all the bashers who turned out to be right in general (failure) if wrong in particular (Suria).

I'll be around on other boards, following people who understand how to make money and control their fear/greed/credulity in the marketplace.

Best of luck to all longs, shorts, and neutral observers,

razorfangius

__________________

Letter to the Community
Beginning February 14, The Motley Fool will begin charging a low annual fee to access the Fool Community's discussion boards. From now until February 13, you can become a Charter Member and get two years access for the price of one.