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Strategies & Market Trends : Value Investing

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To: rjm2 who wrote (13322)	11/18/2001 3:46:57 PM
From: rjm2	Read Replies (1) of 78702

Looking for feedback on DIYH. (I worry that my judgement is clouded since I own so much) Currently $1.01-1.15 with a large block crossing at $1.06 friday. I still believe it has a LOT of upside. Comments please ! "Currently DIYH has a book value of $1.47 per share. Thats with their 5 owned properties on the books for $14.525 million. Cost was $16.991 million. Doing some figuring, I deducted 7% from that gross figure to account for 7% sales commissions and then added 3%,5% & 7% annual appreciation for 6 years and then subtracted 7% for sales commissions and the potential "gains" on real estate owned run from 3.11 million to 5.27 million to 7.638 million for 3,5 & 7% appreciation rates respectively. This equates to 42 to 72 to $1.05 per share. Included in store closing costs liabilites is $2.33 million in future lease payment provisions for ONE store where the lease term runs 6 more years. If that store is sold or they get out of the lease some other way, they would get much of that back as a gain. So, I would say at least $1.75 million or 24 cents will likely be coming back to book value there. So I see an ultimate book value ranging from $2.13 to $2.76 per share. All costs have been accounted for except for costs relating to the owned stores untill sold and dilution from stock options. So I will go with $2.00-2.60 as my projection of what COULD be left depending on their stores appreciating 3-7% per year for 6 years and them getting out of the one lease with 6 years remaining for $578k or about a year and a half of the remaining term. The shares are currently at $1.01-1.15 and a case could be made that they are indeed STILL significantly undervalued. I project an estimated $1.50 per share in cash after selling 2 of their 6 properties which could occur in the 4th quarter. One wonders how urgent they will be in selling them. I mean, do you sell a building you think might bring $5 million for $4 million just to get out of it ? Seems to me they need to decide what they are going to DO before they can decide that. But in a month and a half they could be sitting on CASH of $1.50+ as well as having a lot of real estate left. As this becomes more widely known, the shares will almost certainly continue to appreciate. "

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