I spent several hours researching it last night.
After the effort, I'm still not sure whether it is the buy of the year or the sell of the year. It reminds me a lot of TYC or FNM some time ago. The same thing is occurring here. The attack is brutal and on issues that the most advanced investors could not comprehend, but the earnings estimates are not coming down. It is now at about 5x next year's earnings.
The problem is that management took a brutal hit on "investments" to the tune of some $1B (after tax) in the last quarter with no advanced warning of the problem. Further, it appears that about half that amount was due to entities that corporate officers had a position in. Moreover, the management, which is well-respected, has been less than forth-coming on this issue, or whether any more of these time bombs are sitting out there. Worst still, GS has it on their recommended list.
However, it is clear that the "core" business, whatever it is, is extremely profitable. I do have a position from much higher levels and have watched this with amazement. I'd previously decided that I'd wait for the folks that want to eliminate it on their 10/31 statements before adding to the position.
FWIW, but one of the interesting Big Boyz. In any case, it demonstrates why the next best seller of the Beardstown ladies is going to be titled: Buy and Hold Sucks!
Berney |
