Subject: Re: What is the answer?
Date: 3/16/99 8:39 AM Pacific Standard Time
From: Bonzo3
Message-id: <19990316113941.11215.00000063@ng63.aol.com>
Dear JDN,
What is the Answer? Continuing and sustainable earnings growth. Continue to post impressive Y2K related revenue and income for '99 while communicating to the street TAVA's post 2000 business - still evolving. Persistence and Performance. Eventually the Value that TAVA is building will be recognized. Continue to make non-dilutive strategic acquisitions for post-2000 (replacement revenue). TAVA is building infrastructure and scale;
technical headcount, internal IT systems, 14 regional offices, strong Domestic and International partners, new markets, new business initiatives, diversified strategies and acquisitions. The street says the stock is worth $6.00 because of the following reasons imo:
1. Y2K only perception
2. Perception of slow/no revenue growth in non-Y2K core business
3. Negative Small Cap sentiment
4. Lack of analyst coverage
5. Lack of sustained institutional sponsership
6. Earnings predictability - post 2000
7. Lack of formal program or policy of enriching shareholder value
8. Less than stellar balance sheet - sequential improvement aside
9. Mangan acquisition not completed - details not released.
IMO TAVA, by the end of '99, and probably much sooner, will have corrected or removed most of the above negatives with the exception of #3 - hard to predict when Small Caps will be back in vogue. Are there any guarantees? No of course not - this is, and always has been, a speculative Buy. That said, I believe, based on substantial research, the underlying value that TAVA is building will eventually be recognized. As a long term investor I can afford to wait.
Subject: Re: What is the answer?
Date: 3/16/99 10:54 AM Pacific Standard Time
From: Bonzo3
Message-id: <19990316135442.01633.00000096@ng-fv1.aol.com>
Roig let me add a #10 to that list. TAVA has a trailing P/E of 12. Based on projections, TAVA has a forward P/E of 7. Based on this and several other stocks I own, most notably THQI, Value Based Investing is obviously out of favor right now. This is a momentum driven market. Lots of dollars chasing too few sectors or stocks. On the retail side we have the internet craze and the day trading
phenomenom. On the institutional side we have constant and large inflows of 401K dollars and investment capital. Investment managers only know how to do one thing with these large inflows - keep investing in the branded large caps that have help push the Dow and S&P to record levels - perhaps a few are raising a little cash mostly for redemption purposes. Flight to quality? Yes, but at what price? Even quality has a price limitation. Historically, the current S&P P/E is way out of line and trading at a significant premium. One can argue that these old investment disciplines and ratios no longer apply in todays market. Perhaps. And then at the bottom of the food chain is our TAVA. Why would any of these "investors" be interested in TAVA? Except for the AOL, SI and Yahoo message boards, they don't even know this company exists - it does not appear on many radar screens - either retail or institutional. Some how, some way, this must change. The only way I know to facilitate this change in perception, or recognition, is continued revenue, earnings growth and a thriving post-2000 business. The quality of TAVA's earnings are being viewed with a very skeptical eye at this time. Therefore, more patience and tolerance will be required - yes, above and beyond what most of us bargained for I agree. One must be prepared to hold well into 2000 to realize a reasonable valuation level for TAVA imo. On that basis I completely understand anyone who would sell at this time.
10. Value Based Investing is out of favor
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