Lately, Wall Street research analysts have been sporting blindfolds and getting in their final requests (“one more $300 target price, puh-leeze!”) as they face a firing squad of securities regulators who have suddenly, shockingly discovered bias in some research reports.

The investigation continues (for another 200 years or so).

But maybe there needs to be another investigation.

This one would centre on the morons who buy stocks based solely on research reports.

Yes, you and me. Dumb-bells who don’t know the difference between an opening bell, a closing bell and a Liberty Bell.

This shocking revelation – that investors are dumber than a bag of busted dot-coms – occurred to me after several entertaining hours perusing research reports with obscene target prices that were written during the height of tech mania in 1999 and 2000.

If you close one eye (the one that focuses on the target price) and actually read the entire report with the other, you might be surprised. You will smell the coffee. A light will go on. Alarm bells will go off – about two years too late.

During the silliness of the tech boom, when reading anything but target prices was not only out of fashion but a felony, Calgarians were particularly lovestruck by a busty wireless play known as Wi-Lan with a can’t-miss ticker symbol – WIN.

In case you’ve been basking on a beach in Tahiti the past couple of years and spending your paper profits, call home.

Wi-Lan shares recently traded at $2.70, a far cry from its $85 peak of two years ago.

During 2000, Research Capital wireless technology analyst Rob Millham issued several reports on Wi-Lan. Aside from lofty target prices, the reports were heavy on speculation over contracts and wireless potential and light on any convincing financial data.

But this was not unusual for the raging tech bull market.

Target prices in most reports on tech companies at the time were skating on dangerously thin ice with little substance to support them.

A Research Capital report on Wi-Lan from August, 2000, gave a speculative buy recommendation and a 12-month target price of $100 (then priced at $47.15), but buried in the report was one line that should have sent investors stampeding to the exits.

Wrote Millham: “The reality is that despite the very large potential, this is a new market and skepticism is warranted.”

Millham also wrote at the time:

“It’s difficult to value a company like Wi-Lan with little sales to supply a hefty market capitalization.”

The Wi-Lan reports from 2000 also included earnings estimates of $205 million for 2001 that missed the mark by $175 million!

By November of 2000, Research Capital’s target for Wi-Lan was halved to $50, then $30, then $20, then $15 even though the speculative buy recommendation was maintained.

By last September, the stock was downgraded to ‘accumulate’ with a $2 target price and Millham cautioned that the company “needs to show better evidence of controlling expenses.”

By last November, it was reduced to a ‘hold and accumulate on weakness.’

In Millham’s latest report on March 15, Wi-Lan was a ‘hold’ with a $4 target and another cautionary note that “the lack of strong indications for an apparent recovery keeps us cautious.”

In an interview, the Vancouver-based analyst said he would “probably go to an accumulate (rating) soon” because he “still believes in the technology of Wi-Lan.”

But his view of Cell-Loc (CLQ-TSE), the other hot Calgary-based wireless play in 2000, is not as optimistic.

Cell-Loc, recently priced at $1.56, is saddled with a ‘reduce’ rating with the target price under review.

In his last report on Cell-Loc in December, Millham responded to a news release by saying: “The news release is very short on details, and management has not made themselves available.”

Today, Millham covers 10 wireless stocks and only three are rated buys, albeit with relatively modest target prices to reflect the new world order.

Those three top picks, including Calgary-based Wireless Matrix (WRX-TSE) and CSI Wireless (CSY-TSE), are featured in this week’s Three Stars feature, on Page 17. The other pick is Versatile Mobile Systems (VMS-CDNX).

Millham, a 15-year veteran analyst, doesn’t anticipate the wireless sector will enjoy a robust revival aside from “some spotty success stories.”

And he is quick to throw in the following red flag:

“BECAUSE THESE INVESTMENTS ARE NOT PROFITABLE, THEY’RE HIGH-RISK INVESTMENTS SUITED FOR PEOPLE WITH ABOVE-AVERAGE RISK TOLERANCES,” Millham warns of his top picks.

The boldface and caps are our own for the benefit of investors with eye trouble.

* JUNIOR IDENTITY CRISIS: Some investors still refer to the Canadian Venture Exchange by its old handles, the Alberta Stock Exchange and the Vancouver Stock Exchange. Now Canada’s junior exchange is being renamed yet again, this time courtesy the Toronto Stock Exchange.

Over the next few weeks, the TSE, owner of the CDNX, will be implementing a new symbol, TSX, and begin calling the CDNX the TSX Venture Exchange.

The stodgy old TSE is trying to polish its sagging image, but did it have to resort to name calling?

TSX Venture Exchange? Sounds like a seedy hockshop.

* SAGE ADVICE: “When you live on cash, you understand the limits of the world around which you navigate each day. Credit leads into a desert with invisible boundaries.”

- Anton Chekhov, Russian author, 1893.



HOT ALBERTA STOCK: Wireless Matrix

WRX-TSE $6.65 Up $1.05 (+18.8%) on 814,200 shares (for week ending April 12). While the tech market continues to flounder, Calgary-based Wireless Matrix is proving to be a gem, trading within a dollar of its 12-month high and up about 500 per cent from its year low. The latest rally for the wireless data services company was spurred by news of an order from Nexterra for its Mobile Base Station technology.

COLD ALBERTA STOCK: World Point Terminals



WPO-TSE $3.30

Down 95 cents (-22.4%) on 9,400 shares (for week ending April 12).

Hey, at least somebody noticed Calgary-based World Point. The bulk oil storage company hasn't had any news since November when it reported revenue of $26,347 for the first nine months of 2001 and its stock went 11 consecutive days in March without trading a single share.