I'll quote some of the article from "Investors Digest" dated April 10,1998.
Money managers at pension and mutual funds are professionally trained and have access to the latest information, so it's usually a good sign for a company when an institutional investor buys a big chunk of its stock. Since fund companies are legally required to announce their purchase whenever they aquire more than 10 % of a company's shares, retail investors can see who's buying what, and should be able to profit from the information. In March, TD asset management Inc. announced it had acquired more than 10% of the forest products supplier Repap Enterprises Inc.
They bought 5.4 million and now hold a total of 79.2 million units or 10.67 % of the companys outstanding common shares.
"We bought most of the shares at $.10," says Doug warwick, Td's managing director of corporate and investment banking. "Any time you can buy a stock at 50% of next years cash flow, it's a good deal."
repap is "a cost-cutting story as well as a product pricing story." said the Td manager.
He predicts a cash flow of about $80 million this year and $150 million next year, with little capital spending required. With $150 million, or close to $.20 per share in cash flow, repap's current price is a bargain, currently @ $.27.
"With all the merger-mania going on in the industry, it's possible that someone will want to take us out for $.50 a share, or maybe two or three years from now it will be worth much more than that." |
