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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: Allen Furlan who wrote (7533)	6/10/1999 5:23:00 PM
From: Bob Rudd	Read Replies (2) \| Respond to of 78659

Allen: CMM has, as you're probably aware, a Yahoo thread with 1500 posts on it....I know it's like panning for gold, but there are usually at least a few substantive commenters on those threads. The IR may not be aware of it, but I suspect many non-traditional analysts like George Putnam are following CMM, but you have to buy his newsletter to get that. Here's some $$$ infor: bankruptcydata.com Here's an indication of how CMM got into this pickle: <<In the interview Whitman, who has been known for years on Wall Street as a canny value investor, said the CRIIMI MAE bankruptcy is a powerful argument for rewriting some accounting rules. He said that although the company had sufficient cash flow to cover its debts, so-called "mark to market" pricing for securitized mortgages in its portfolio led to a crippling margin call when bids for this kind of paper disappeared in the aftermath of the Russian default. Whitman said it makes more sense to carry performing loans on the balance sheet at amortized cost, rather than having the value based on the daily price fluctuations. >> I have no indication whether Whitman is currently active in CMM. I haven't decided to devote enough attention to distressed/ bankruptcy investing to start a thread on it. Favoring this approach you have the idea that change causes holders to bail and take the tax loss rather than hold and wait for a favorable outcome. Also bond holders are rarely thrilled to be converted to common holders. These motivated sellers may created a buying opportunity. On the other side, you have rapid deterioration in asset values [fire sale] that can outrun even the most negative sentiment. Also distressed, post filing investing is mostly about bonds...reading bond covenents isn't my cup of tea. Outside investors are at significant disadvantage to insiders that control the negotiating agenda and can justify hiring legal and expert help. The last issue is time...these things can take years to resolve, so time value of money considerations must be weighed. I'm not rejecting the idea, but am viewing distressed investing as a back burner project at this time. Much of the above doesn't appear to apply to CMM, though, since it looks like the common is on high ground. Based on the Whitman quote, I would wager that the mortgages rebounded from bidless lows and are now viable assets. bob