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Strategies & Market Trends : Value Investing
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To: Don Earl who wrote (11736)1/7/2001 9:20:37 AM
From: Madharry   of 78901
 
that is one terrific post. thank you. A couple of caveats though. I would say that sometimes seeing a preferred issuance means that at somepoint in time the company has had a major shortage of cash. it could also mean an opportunity. especially if the company is in the technology business. FYI Most major banks have preferred issues outstanding.
Usually companies are cheap by historical standards for a reason. Assets are only worth something if they can generate future earnings. if a company has a product that has become useless, the assets used to produce the product are generally useless. earnings reflect what has happened in the past not the future. There may also be some threatening litigation- see the asbestos companies. Lastly management may be particularly unfriendly to shareholders. For example most people who have invested in shares in companies controlled by Icahn, Pearlman, Trump have fared poorly, although at times the shares have looked like bargains.

Finally, as one who has suffered from this form of myopia.
shares in other companies valuation is too often in the eye of the beholder and have been volatile. What has looked like a huge margin of safety in a stock has evaporated when the price of a major holding has tumbled by 50-80%.
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