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Strategies & Market Trends : Value Investing

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To: Lazarus who wrote (45728)	12/3/2011 10:43:56 AM
From: E_K_S	Read Replies (1) of 78751

Hi Laxarus - You bring another intriguing Value play to this board. Dex One is the old RH Donnelley company (or what remains w/ them after they came out of bankruptcy). The Seeking Alpha article spells out the value proposition: very large free flow cash vs large debt service. If they can survive at their current cash flow rate all lt debt could be paid off in six years. Dex One: A Potential 20-Bagger Stock seekingalpha.com Conclusion from the article:"...Here we have a stock that can be worth $20 in 3 years. If you demand a 15% return on your investment, you should be willing to pay up to $13 for the stock today. Add another 50% margin of safety and any price under $6.5 should be a great purchase. Of course, the stock is right now available for $1 so it is especially attractive....". Paulson & Company now own 7% of the outstanding stock according to the article. This is a very small bet for them so I would not put too much into their investment. Paulson & Co. Reports $23.3M Stake in Dex One - cbl Posted February 15, 2011 charlotteraleigh.citybizlist.com -------------------------------------------------------------------------------------------------------- This one is not for me as I am trying to reduce all of my positions that have an unfavorable debt profile. Perhaps if the times were a bit different and there was not so many cross currents in the macro economic picture, I might look at a small speculative position. The argument made by the author that the company does have a possible exit play all hinges on them maintaining their current level of free cash flow. I just think that the paper directory business is dead. As Google expands their mobile "indoor" Map product(s) into every new hand held devise and tablet, Dex One could now also see their Internet directory sites suffer. Google is doing everything right in this market while Dex One continues to do a lot of things wrong. EKS

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