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Biotech / Medical : FPA Medical Management - FPAMQ
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To: Laparrot who wrote (899)7/14/1998 12:36:00 AM
From: Ben Beale  Read Replies (1) of 1110
 
Laparrot,

I wouldn't characterize FPA as a screaming buy. While it has secured a stand-still agreement with its main lenders through 12/1/98, it also is having real trouble finding additional capital whether through new or existing lenders. FPA claimed at one point to have $1.2 bil. in annual cash flow, but the 8 or so lawsuits that have been filed alleging securities fraud cast doubt on management's veracity. FPA is still a relatively new company and was on a voracious acquisition binge until very recently. Circumstances have forced management to reverse course and it has been quietly shedding less profitable contracts. Other cost reduction actions, such as trimming the 4200-person payroll, have yet to be taken. In my portfolio, FPA is a high-risk speculative gamble worth only 1 or 2 percent of total capital. I hope there's more upside potential than downside risk at this price, but I wouldn't bet the milk money on it.

r/s
Ben
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