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Strategies & Market Trends : Value Investing

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To: Paul Senior who wrote (15654)	10/17/2002 10:56:34 PM
From: James Clarke	Read Replies (1) of 78519

UHAL I looked at many times 3-5 years ago and passed (fortunately). I was very close to buying it several times. What kept me away wasn't the corporate governance, it was the balance sheet. Debt. Which brings on a thought I'd like to share. I was giving a speech yesterday and a business school student asked me why the two companies I was highlighting have no debt. She pointed out that her finance class taught her that debt provides a tax shield, so they're leaving money on the table by being debt free. I responded something like, "Great, you saved $20 million in taxes. But you're bankrupt. Congratulations." I do not like debt, and I like managements that don't like debt. Its not just the financial leverage. I just find that managements that hate debt as much as I do also have other characteristics I like, and managements willing to take on massive amounts of debt have other characteristics I don't like.

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