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Strategies & Market Trends : Value Investing

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To: Michael Burry who wrote (6778)	4/16/1999 3:52:00 PM
From: James Clarke	Read Replies (1) of 78576

A beauty of a net-net started to move off a bottom this week. Take a good look at Lazare Kaplan (LKI), the global leader in diamond cutting and distribution. Even after a 20% move, it trades below net working capital. That working capital is predominantly diamond inventory, and DeBeers never lets diamond prices fall. There are several catalysts for this stock to run (and by run, I mean double). Earnings are very leveraged to Japan, and Japan may be showing signs of a recovery in diamond demand. Second, the company is about to start a JV with General Electric that could produce a lot of earnings, but will at least get the company some attention (its what Wall Street calls a "story"). Third, the stock historically tracks DeBeers. DeBeers has made a 62% move so far this year, and LKI has done absolutely nothing. The company is buying back its own shares. My source on this one is the same guy who called ANGLY (also DeBeers related.) ANGLY may not be done either. My average cost is about 8 FWIW. Jim

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