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Concluding, Mr. Davis opined that the sale of the Trust's
block of Applied Power stock, when added to the supply of shares
regularly coming on the market at the time of decedent's death,
would have only a moderately depressing effect on the normal
pricing of the shares, making appropriate a 3.3-percent blockage
discount.
Rebuttals
Mr. Kleeman believed that Mr. Davis' 3.3-percent blockage
discount conclusion is based virtually exclusively on information
that became available (and events that occurred) after the
valuation date and that such postdate information and events were
not foreseeable as of the valuation date. In Mr. Kleeman's
opinion, the economic conditions leading to the Trust's 1994 sales
were significantly different than the conditions existing as of the
date of decedent's death, and were not reasonably foreseeable at
that time (i.e., the upgrading of its rating of Applied Power
stock from a "Hold-3" to a "Buy-2" rating by Baird in January 1994.
Further, Mr. Kleeman noted that 8 days before decedent's death,
Baird had rated Applied Power stock as a "higher risk".)
Respondent counters Mr. Kleeman's criticism by pointing to Mr.
Kleeman's own September 1998 report and testimony, which according
to respondent show that Mr. Kleeman arrived at his 22.5-percent
discount figure by performing a price trend analysis for the
Applied Power stock and projecting that trend forward to a post-
date-of-death absorption period. Respondent further asserts that
in preparing his "regression analysis", Mr. Kleeman made several
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