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Strategies & Market Trends : Value Investing

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To: Paul Senior who wrote (47144)	3/23/2012 1:00:12 AM
From: Spekulatius	Read Replies (1) of 78744

re BHI >>"Buying in the $30's", yes, possible stock will get there again. It's 10% away. In the low $30's we'd be talking '08-'09 lows again. If $36, it'd be at a price/stated bv of 1x.<< BHI was around 37$ in Fall 2010, after they announced the BJS takever. i think it will get there again. Stated book is irrelevant, they have now 7B$ in goodwill due to the BJS takeover mostly. A lot of the 7B$ that they invested in BJS will eventually be written off. BJS made 300M$ in earnings pre-merger and I don't think that they will be able to hold that earnings level, so in given that BJS is a very capital intense business, it is probably worth less than 3B$ now. Due to the merger, BHI has added almost 40% in share count and the balance sheet looks worse now than in 2009/2010 (Cash component of merger and low FCF due to heavy Capex). I think they blew it big time with the BJS takeover and it will take a long time to clean up the mess.

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