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Strategies & Market Trends : Z PORTFOLIO

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To: pz who wrote (5514)	10/22/2000 10:09:02 AM
From: Ron McKinnon	of 11568

I think this kind of discussion is great So let me be blunt on FNV I BLEW THIS ONE Have been 100% wrong on it And now am just waiting to see how it shakes out I have posted a lot on it before so there is no big reason to go back over old ground The comments made by Paul, Sue and Larry are right on the money Those by Dan give good solid reasons but right now those mean little because the market is saying differently I knew FNV because I spent over 20 years in that business At one point I ran a $2 billion asset based portfolio and a $6 billion factoring business My unit was put up for sale and I spend a lot of time in Phoenix negotiating with Sam E ( the ex CEO) a purchase of it by FNV (did not happen, someone else made an offer 3 times higher than them) FNV was a loved stock hitting a high of $60+ when it was growing like a weed; Sam was a hero, was on all the business programs, rang the opening bell at NYSE etc etc Now he is out and the stock is as hated as it can get When a stock is trading at an all time low, at a P/E of 2, 13% of book value, and gives a dividend of 20% the market says those of us buying have no clue in the world what the real story is I got suckered in by all of the above Plus I assumed: -that there would have been a buyer long before now -that the full scrub audit would have uncovered any other major problems long before now -that the company would not have paid the dividend a few weeks ago if it was going bankrupt -that there would have been many more downgrades -that forward earnings projections would have been dramatically lowered -and I saw well respected value fund managers buying the stock technically I got suckered in when it went from 8 to 20 then fell back to the 8-10 area I thought it would bounce a second time Then it fell to 6 and popped to 8 So I thought a second 6 entry would pay off Wrong! Right now no one in the industry knows a damn thing The company will not talk using the fact that they are up for sale as a reason They have moved back earnings from now till 11/14 which is the latest date they can under sec rules So again let me be blunt I was dead wrong on this now it is a pure crap shoot I can not conceive that the loan portfolio is so bad that it can not be sold or liquidated at a price much higher than $3 But if no buyers and the company can not re fund they may have to file an XI Then I will have to sit for 6 months to 2 years for it to wash out I have held this because I kept thinking the market was wrong and that I knew more then the sellers did I added Friday just to have a few “cheaper” shares on the books There is an excellent lesson in this for everyone And I think it is very helpful for us to openly air our mistakes; one learns more from them then from the good trades we make

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