<o.t.>Hi Bernard, I don't know the psychology of the stockholders of the parent companies, but they seem to be value investors. I came across this phenomenon, which could be more a norm than an exception, when I parsed thru an annual report of one of my mutual funds, The Mutual Series [now belonging to the Templeton complex] Beacon Fund a number of years ago. The then fund manager, the legendary Michael Price, has taken stakes in companies like GM and BCE for their deep values [intrinsic or breakup.]
The true is that you are absolutely right, patient investors will be rewarded. The key is that word 'patient' [I guess I am repeating myself, since I ve kinda alluded to it in one of my prior posts.]
In time, there are a few alternatives. 1) Spinoff; 2) the child comes down to meet the parent; 3) the parent goes up to meet the child; and 4) a combo of #2 and #3.
In short, I think everyone involved in this discussion is sort of in agreement - at least I think we ve never had a diametrically opposed argument - WMB is a good investment relative to WCG. However, some of us feel that if one chooses to invest in WMB, one should be careful that the traditional hedging mechanism may be dangerous if one doesn't have a deep pocket or if one leverages too much.
best, Bosco |
