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Strategies & Market Trends : Value Investing

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To: Madharry who wrote (7195)	5/18/1999 4:10:00 PM
From: Michael Burry	of 78717

My principle on Oracle is that they are well-positioned to continue earning high ROE/ROIC. Over the last 10 years, they've steadily grown profits, book value, and maintained a ROE on average of about 32%. Return on Capital sits up around 30% on average. So at a recent PE of about 30 (in the lower half of its five-year range), the company still looks to return between 25% and 35% compounded annually. There's a big margin of safety there, but only IF you think it can continue to earn these types of returns. I've become convinced that despite some likely turmoil this year, it can. It has hit big turmoil twice before and recovered well to the same range of returns. Mike

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