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Strategies & Market Trends : The Round Table: A work by the squares of the SNDK thread.
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To: Paul Senior who wrote (153)5/22/1999 2:23:00 PM
From: phoenix   of 194
 
RE: RCOT

Okay Paul, I bit on this one. Since I am a PSR guy you got my attention. Yes the value numbers on this one are eye opening. The fact that the market beat the stock price down on the recent earnings disappointment is also appealing. However,.......

Low margins, low barriers to entry. All of their products are commodities. That in itself doesn't have me concerned if the company truly has great management, vision, and potential growth. I see nothing in the new releases or other material to make me think that these guys have a handle on how to come back to profitability. In fact, they recently hired a consulting firm to help them with this task. My experience with outside efficiency experts is they tell management what they want to hear, and management continues to do what they want after the consultant leaves their report. Recommendations are usually ignored or paid lip service to, and things go back to "business as usual".

Warren Buffett only plays when all aspects are in his favor. With RCOT, I see two things going against it. Management and inherent low margins.

Also, you may be trying to catch the falling knife.

On the other hand, with the value numbers, it would not surprise me if you make money on this one.

Good luck,

Roger

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