Newspaper article THE JOURNAL RECORD

Ghosts of Stock Market Silliness -- Past, Present and Future

Newspaper article THE JOURNAL RECORD

Ghosts of Stock Market Silliness -- Past, Present and Future

Article excerpt

NEW YORK -- Gather under the ticker for today's lesson in stock market silliness.

Hear about a bust of the recent past: Eurotunnel, which essentially went broke tunneling under the English Channel.

Listen up about a bubble of the present: HFS Inc., a combination of prosaic hotel, real estate brokerage and car rental companies selling at 84 times earnings. And learn about a folly of the future: RAO Gazprom, the world's largest producer of natural gas, which plans a pricey public stock sale for people with dollars. Eurotunnel Group, owned by separate British and French companies, Monday averted bankruptcy when its banks agreed to restructure the enterprise's debts. Costly over-runs on the Channel Tunnel left Eurotunnel some 72 billion French francs ($13.7 billion) in debt. That was no surprise to anyone familiar with the fate of any huge public works project, which this essentially was. Such trouble may have been a surprise, however, to the 750,000 small investors who bought a majority of the shares in the two Chunnel companies. The promise that somehow this construction project for speeding trains and cars between England and France would be profitable carried London-traded Eurotunnel shares to 543.57 pence in the fall of 1989. Four years later, the stock flirted with that level again. Then reality. The shares last traded on Sept. 27 to 113.5 pence. Paris-traded Eurotunnel shares fell from a high of 47.38 French francs in early 1994 to 9.15 francs on Sept. 27. Market losses are just the beginning. If the agreement with the banks is approved, current Eurotunnel shareholders could see their stake in the business reduced to 39.4 percent. "This beats bankruptcy," said Christian Cambier, head of a 3,000- member French group of Eurotunnel shareholders. Barely. Parsippany, N.J.-based HFS acquires companies as fast as its price/earnings ratio soars. …

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