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Strategies & Market Trends : Value Investing
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To: Paul Senior who wrote (5140)10/11/1998 12:12:00 AM
From: jeffbas   of 78898
 
Paul, two comments.

My comments on banks and insurance companies were meant to say that I believe that most people do not understand the risks inherent in the capital structures of these companies. What that means to me is that most of the time, but not all of the time, I believe the pricing of the stocks does not carry a high enough risk factor.

On LHO, I would have bought it under $8 if I had been paying attention. However, I think the price decline has occurred for all the reasons you stated, plus one other. I assume they purchased all or most of their properties at the peak of a "feel good" financial environment. There may also be a factor in the pricing to reflect increased risk that because of the leverage the market value of the properties might decline to a point where the real book value was
materially reduced.
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