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Strategies & Market Trends : Aetna ( aet)
AET 212.70+0.3%Nov 28 4:00 PM EST
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To: Terry Maynard who wrote (83)2/11/2000 10:24:00 PM
From: Logain Ablar  Read Replies (1) of 110
 
TM:

It looks like a value now - why is the market punishing it?

Let me count the ways.

1) Poor leadership.
2) Poor management.
3) Ingrained culture.
4) Lost creditability with the street - again.
5) High costs. They sold the PC business 4 years ago, the life business two years ago and they still occupy the same space in Hartford.
6) Buracratic.

The company's market value today is less than 50% of what they paid for US healthcare 4 years ago and the Pru operations.

It would be easy to maximize value and get this stock over $100.
1) Sell the international business. Maybe get $500M afit.
2) Spin off the financial services operations (not sell off, the shareholders would be screwed again). Potential worth of 5 billion.
3) Sell the headquarters (best bet would be to donate it to Hartford).
4) Leaves the Healthcare operations with dual headquarters in Middletown, CT and Bluebell PA. Worth 5 to 8 billion.

Current management will not do this. Culture is still to ingrained. The glory days are over for this company. Although it is a value play at these levels. Unfortunately I've seen value plays become even better value plays.

If it hits $30 I'd be a buyer. Two more shoes to drop.
1) The healthcare leglislation (although this may be priced into the stock)
2) Repricing of options. Senior management (and many of the good hardworking employees) have a lot of options that are worthless unless the stock gets to high 80's (and they won't take the actions that would put them out of work to get the stock to that level).

Tim
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