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Strategies & Market Trends : Value Investing
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To: Stewart Whitman who wrote (2654)12/6/1997 7:23:00 PM
From: Michael Burry  Read Replies (1) of 78594
 
Quantum analyst opinion

This is from Lehman from a downgrade on 12/3

"While drive stock prices have collapsed to what might be viewed as compelling levels
of valuation, we remain unconvinced that we have yet reached an inflection point in the
fundamentals which will serve as the catalyst for a recovery in the group. Due to lack
of visability into improving market conditions, and a corresponding lack of substantial
improvement in the supply/demand fundamentals and related pricing aggressiveness,
we believe
the group will continue to underperform near-tearm"

"Correspondingly, we readily admit that it is too early to re-enter the group at this time.
Even Quantum's shares - which we believe are severely under-valued at current levels
( with the tape business alone valued at approx. $40) - will likely remain under
pressure until both sentiment and earnings visability for the group improves."

"However, as soon as we see evidence that the environment has stabilized, we would
aggressively recommend purchase of the shares in the HDD sector with the
expectation of strong gains in 1998."

"Quantum remains our favorite stock in this space."

*************

IMO, the downgrade reflects analysts' preoccupation with short
term appreciation, and the rest of the wording confirms my
own analysis of the stock and the cyclicality here. Looks
like a long-term buy to me. That DLT business is like an
undiscovered asset which, unlike land, has a defined payoff
timetable (no offense to land investors).

Mike
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