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Strategies & Market Trends : Shorting stocks: Broken stocks - Analysis
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To: Daniel Chisholm who wrote (1151)6/15/1998 5:20:00 PM
From: Q.  Read Replies (1) of 2506
 
I estimate PAMCE's fair value at around $2. That's based on 1X book value, using not GAAP, but rather the other accounting system used by insurance companies to arrive at book value.

When I called a few weeks ago, the outside director who was serving as IR told me that while shareholders equity would fall to a few million under GAAP due to the asset writeoffs, it would not fall at all under the other accounting system. So that would leave 'shareholders equity' under the alternate accounting system (which I'm not familiar with) at about $20 M, divided by 10 M shares out, giving a 'book value' of about $2 under that accounting system. (Book under GAP will fall to less than half a buck.)

Based on this, I would be delighted to cover at $1 to $2. I don't think that the co. is worthless. It stinks, to be sure, but it isn't worthless.
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