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Non-Tech : SWS - An undiscovered gem
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To: John Chapman who wrote (81)4/13/1999 3:15:00 PM
From: caledonia  Read Replies (2) of 504
 
John,

I agree. Also, keep in mind that the PE is based on trailing earnings. If SWS blows away the estimate next week, the whole scenario changes. Also, the NITE position is worth around $195 million, plus $15 million in cash, plus around $2 per share of additional equity holdings (per Bove). Add these up and you have about $22 bucks per share in cash and securities. That means at 53 bucks a share, we are paying 31 bucks for the operations of SWS (53-22), or around 14X Bove's estimate of $2.20 for fiscal June '99 earnings. Cheap? SWS hasn't even begun to be fully valued. Buy and hold. You don't come across these opportunities too often. If a major house begins coverage, watch out. Look at what happened to NITE today when Goldman came out with a BUY. I have been in the market for many years and realize there is always some downside risk somewhere, but it is hard to find in SWS. Good luck all!
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