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Strategies & Market Trends : Value Investing
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To: Bob Rudd who wrote (17844)10/10/2003 8:43:55 PM
From: TimbaBear   of 78890
 
Bob Rudd

RTWI--Wonder why American Physician decided not to acquire RTW in late 2001

My guess is that they took a deeper look at the financials and ran screaming for the exits. The founder had retired and the then current CEO had decided to expand operations into many states and the company was bleeding badly under his watch. Right after American Physicians backed out of the deal, the founder of the company pulled off a palace coup and returned to try to get the RTW ship back on course. Since that time, RTW has stopped expansion, closed offices in several states, engaged in risk mitigation through reinsurance, and performed whatever internal surgeries they felt they needed to to get back on track.

You are oh so correct to point out that there may be flies in the ointment. While the cash flow may be sporadic, it appears that it has moved from negative in 2000 and 2001 to positive in 2002 and the last 4Q ended 6/03.

One of the reasons (as I understand it) that this company started its big price decline after 1997 was changes in the WC laws. Those changes apparently limited the amounts that could be charged while increasing (I think) the amount of coverage that needed to be provided. So your comment that WC changes can impact companies in the market appears to be right on point here as well.

Still and all.....looks like a value play to me. Hope I'm right, I took a small position this week to "try it on for size". I seem to watch these issues more closely when I have real dollars at stake.

Timba
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