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Strategies & Market Trends : Value Investing
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To: MCsweet who wrote (19269)6/10/2004 4:31:51 PM
From: Bob Rudd  Read Replies (1) of 78523
 
McSweet: <<Why does the stock keep going down?>>More sellers than buyers? ;) The Yahoo board is populated with traders almost exclusively. The chart looks bearish, but I see potential support @3...a tenuous technical hypothesis, but this is primarily a fundamental play for me. Also possible disappointment that growth isn't linear as expected...I would be worried if a construction co's earnings WEREN'T LUMPY...that would indicate cooked books.
The $5.6 mm put - I'm not worried about it like it was some derivative that might explode in value since it's anchored to EBITDA, but it's possibly one of those related party type things you don't like to see. I don't know anything about the put really other that what's in the K.

<<With debt > equity, I wouldn't exactly say there is a huge margin of safety --- if things go bad this company could go in the crapper. On the other hand, it seems like it could appreciate a couple times over.>>I agree. Part of my DD was to explore prospects for Houston construction market...hence the comments on the need for sewer infrastructure. Beyond that, consider that Houston still has considerable tailwind from favorable petroleum prices...which look to stay firm for quite awhile given the structural issues. These factors may not create a 'boom' in Houston infrastructure spending, but they tilt the odds away from the crapper scenario IMO. I also like the focus on a single large [4th largest city] municipality since they get wired in well with city 'wheels'...it creates a bit of a moat.
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