Hedgie Renounces Shorts, Saves Face

Plus, an analyst recommends the rotting pulp press and a Salomon economist disses tax cuts.
Publish date:

SAN FRANCISCO -- Riding the coattails of market-cap heavyweights


(MSFT) - Get Report


General Electric

(GE) - Get Report

, major averages ended the week at record levels. (For more, see today's

Market Roundup).

Paul Allen's Coattails

In said Market Roundup, I reported how Aron Thompson of

Infinity Investments

near Seattle has renounced his shorts, if not his long-held bearishness.

"The problem is, the market keeps going up," he said. "You get scalded short, then you've got to sell more to get a user-friendly basis, and you're throwing more good money after bad."

Having gone nearly entirely to cash back in January, Thompson soon began looking for "sympathy stocks" riding along with the



"rocket ship."

He settled on three "

Paul Allen

Internet plays" (regional bias?),










Each has been a big winner for the hedge fund manager, who sold out the Metricom around $50 (vs. a $7 cost basis). Today, the stock dumped 8% to 35 3/16 after posting a second-quarter loss of 86 cents a share yesterday vs. a loss of 71 cents a year ago. No estimates were available.

Meanwhile, the fund manager observed Asymetrics "went crazy" when Paul Allen mentioned owning a big stake at the

Allen & Co.

(no relation) conference last week and disclosed as much in a regulatory filing. The "revelations" fueled speculation Allen would acquire the roughly 58% of the company he doesn't already own, sending the stock as high as 11 5/8 intraday last Friday before it closed up 105% to 8 3/16.

Proving this isn't rocket science (but some investors may be sniffing airplane glue), Thompson noted all stocks owned by the formerly bearded owner of the

Portland Trail Blazers

are listed at


Today, Asymetrics slid 2% to 6 5/32.

News Flash

John Roque, senior analyst at

Arnhold and S. Bleichroeder

, emailed clients this morning with a recommendation on


(GCI) - Get Report

. A close above 76 would "complete the base in force since April and imply a target of 92," Roque wrote. "We think it is a good idea to buy some here and add on a close above 76. Stop

at 69."

Today, the stock closed up 1.8% at 76 1/16.

The strategist is bullish on media stocks in general but couldn't be reached to explain why he's so enamored of the rotting-pulp press.

Meanwhile, in an email exchange today with Daniel Peirce, head of emerging markets research at

BancBoston Robertson Stephens

, I casually tossed a question about Taiwan-Chinese tensions and what they mean for the markets, as well as for connoisseurs of Asian cuisine everywhere.

"I tend to think the China-Taiwan scuffle will peter out in due course," he replied. "We again seem to be seeing political posturing producing unintended consequences. I doubt Hong Kong stocks will accelerate to the downside from here, but if they do, it is apt to increase nervousness about Latin America and it may keep the


bid firm. I also suspect that the Asian news is another ingredient in continued firm oil prices."

However, Peirce failed to provide a recommendation for good dim sum.

Taxes Cuts Are Bad!

Save the vitriol, but maybe -- just maybe -- you should be rooting


the tax-cut proposals currently being bandied about in



Spoke with

Salomon Smith Barney

economist Mitchell Held yesterday following his decision to up earning estimates on the

S&P 500

to $48.85 for 1999 and $51.40 in 2000 from $47.75 and $49.50, respectively.

"Once again, boys and girls, we've underestimated growth and productivity," Held confessed.

Dipping into my bag of standard questions (all journalists carry one -- they're similar to those


tote bags you used to get for a $50 contribution, but not nearly as fashionable), I asked Held: "Any risks?"

The economist expects the


to raise rates twice more in the next six months, and "the equity market can get hit as you expect higher rates," he said. "But we don't look for a bear market, because we're not looking for the typical rate increase that accompanies one at this point.

"Importantly, we have not seen a policy mistake," he continued. "The question is, is all this talk about tax cuts a policy mistake? I would underline several times that it is. It's one that could ultimately force the Fed to raise rates more than we expect if enacted. We don't need stimulus now from fiscal policy, or anywhere."

It may be painful to hear (and I'm sure to get tons o' hate email), but Held believes the tax


by Presidents




were "the best thing for the equity market because they enabled monetary policy to be easier."

"If we see big tax cuts, it's a warning sign," the economist argued. "It's not going to bode well" for monetary policy and, thus, the stock market.

Be careful what you wish for.

TSC Special

Even if it didn't contain gems like "posse of profitable snack foods" and "the slushy sweet staple of every good mall rat's diet," Staff Reporter

Katherine Hobson's

Stock Mart: J&J Snack Foods would've gotten the nod for being a darn fine yarn.

And Finally

Sincere thanks to

James Cramer

for the (mainly)

kind words today. However, JJC would be


to know the level of interest in my navel, which I'm proud to say is lint-free for the first time in years.

Speaking of (mainly) kind words, thanks for all your feedback. I'm like


, soaking it all up like a sponge (though I can't spell relief). If you like what you've seen, want more and -- especially -- think I deserve a big raise, please email my boss,

Dave Kansas

, at


Otherwise, enjoy the weekend and don't forget to watch



television show on

Fox News Channel