For Thursday, June 24, 1999 Drummer Column, Gibbs, 724 words

A long sunrise

I'm investing in the stock market, as you know, and I have a story to share. Get it? Share.

Actually, I have a three-week Stock Market Trilogy to present. After that, I'll give it a rest. This week I want to tell you about my biggest gamble.

I bought my first shares in April when all the Internet stocks were skyrocketing to the moon. Luckily, I didn't buy any of them. I watched them go up, up, up, down. I felt jealousy, regret, grief and relief, in that order. What I did gamble on is a small-cap investment.

Being new to the market, and young and brazen, I was eager to take at least one big risk in hope of earning huge profits, so I decided to put half my money on a cheap stock and ride it to the moon.

Of course, I didn't get this idea and then search for a company. I found a company with promise, and then got the idea. It's a tiny laser manufacturer in Fremont called Sunrise Technologies. They have a patent on a holmium laser for treating farsightedness, or hyperopia. It has not yet been approved by the FDA. However, chances are good.

How many old timers in the stock market have heard those famous last words?

Anyhow, another company -- a big, fat, rich, successful large-cap company called VISX -- owns a patent on the excimer laser for treating nearsightedness, or myopia. Visx cleared $134 million last year, and their stock, after two splits this year, is worth $74.50 a share. Sunrise's unsplit shares (SNRS) are today only $10.50.

The other pad in the deck is that Sunrise doesn't compete directly with VISX -- it compliments it. In fact, the holmium laser can fix overcorrections done by the excimer laser. Translation: if approved, there is room in the laser vision industry for Sunrise to flourish.

The FDA panel meets on July 22. The FDA decision will be released in October. The company, the investors, supporting opthalmologists are all optimistic, and so am I.

Now the plot thickens. Because Sunrise is a one-product company without a product, it is prime target for people who short stocks.

*Definition of "shorting a stock": It's like playing the Don't Pass line in Craps. Shorts look for companies that are going to fall in price. First they borrow stock from their broker and sell it at the high price. When the stock falls, they buy the stock back, return it to their broker, and keep the difference in cash.

Presently, the shorts are out in force attacking Sunrise. They've sold their shares high and now want to bad-mouth the company. They are on the Internet bulletin boards creating FUD (fear, uncertainty, and doubt). They say Sunrise is a joke, its laser is faulty, it will never be approved, and so on. This causes the weak hands to fold, and the stock drops. It fell from $14 to $8 last week. Being young, brazen, and long on optimism, I used the dip to buy more. I now own a modest 375 shares.

So here I sit with 50-percent of my portfolio invested in the Sunrise. Come October I will either be working extra Saturday schools or taking my wife out to a few finer diners.

Actually, I haven't shared the best part yet. You can witness for yourself this raging battle between the longs and the shorts. Log into www.ragingbull.com and select the SNRS bulletin board. It's a hoot and high drama. I log in every day and read the postings. Here are millionaires playing with their money, yelling at each other, calling names, refuting research.

Some of the more vocal longs are Bahama Tech, RocDoc, ImIrish. The shorts have been exposed as Flapmaker, Andthen, and Rhapsody; they attempt to disguise themselves as concerned citizens posting only to warn investors against this terrible company, but their bias is as clear as an October sunrise, to me.

Now the disclaimer: I am not touting Sunrise as an investment for you. I'm merely sharing a story that shows shorts in action, and holds my amazing stock savvy up for public scrutiny. If you buy SNRS on your own research and it tanks, I don't want to be accosted while walking down First Street. However, if it climbs, I'll take my coffee with cream.