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Strategies & Market Trends : Value Investing
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To: jeffbas who wrote (5144)10/13/1998 8:33:00 AM
From: Bob Rudd  Read Replies (1) of 78956
 
FSACF - JBash It appears to me that they showed a substantial decline in operating earnings but not a net loss after securities gains. It appears a big chunk of that loss was attributable to depreciation in the SA Rand which took a big hit in June. I wish I could say I completely understand this whole thing, but I don't. My take on it is that most of these businesses are mundane middle market companies that have seen some slowdown due to concern over global finance, confidence erosion, etc. This and the currency hit probably gets worse in the current quarter..actually the currency was down 16.7% from June 30th levels as of 10/9. Tax loss selling, funds wanting out, liquidation of stock used to purchase subsidiaries..have combined to push these shares below intrinsic value ..but due to complexity I would have a hard time proving this. I'm optimistic that 2 - 5 years the global crisis is resolved, currencies come to reflect purchasing power parity more closely and the fundamental described in the analyst report linked to in the original message come back into play ..providing a return that more than justifies the substantial risk.
If you take this years .69 earnings grow them 10% for 5 years and apply a 10x multiple you get over 60% annual return based on buying at todays roughly $1 share. The risk - global depression with no recovery or normalization of exchange rates
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