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

To: JRH who wrote (8616)	10/12/1999 1:40:00 PM
From: JRH	Respond to of 78740

A sea change in PE ratios? You will need Adobe Acrobat to read the article. The following comes from Ray C. Fair of Yale University. In his paper "Fed Policy and the Stock Market" he makes the following argument among other things: "...... the current level of stock prices has unrealistic macroeconomic implications regarding the future share of corporate profits in GDP unless one assumes that there has been a sea change in long run price-earnings ratios. By not cutting off the stock market boom, the Fed has in effect gambled that there has been a sea change." The full article is available here: fairmodel.econ.yale.edu -rth

To: JRH who wrote (8616)	10/12/1999 4:35:00 PM
From: peter michaelson	Respond to of 78740

Using my rather dim memory of my days in the buyout business, I think that public investors can be forced out only at percentage private ownership higher than 50%. The number varies by state of incorporation. I seem to remember that Delaware was 80%, but not sure at all. Usually, a buyer-outer will make a tender offer for all of the shares not already owned. Of course, not all the shares are tendered. Lots of people just throw away their mail, etc. Then they get on the phones to remind folks. The offer has to be high enough that they buyers will garner sufficient shares to effect the forced merger. The forced merger is how all of the remaining shares are brought into the fold. peter

To: JRH who wrote (8616)	10/12/1999 5:09:00 PM
From: Wright Sullivan	Read Replies (1) \| Respond to of 78740

rth(JRH): I don't have the answer but I am in a similar situation (a shareholder in a public company going private). One of my value favorites, CNSO (Conso International), is being bought out by a group sanctioned by management at a nice premium to the current market price but still well below what the business is worth. While I'm making an acceptable profit, I am disappointed because I think someone else is going to benefit much more over the next couple years, once recent investments begin to pay off. In CNSO's case, management already owns a significant stake and isn't selling, just forcing public shareholders to sell out to a private investment group (albeit at a premium). I recall Wayne Crimi had a situation with Sbarro which may more resemble yours, where mgt was buying out the company at a low price. Management is supposed to act in the interest of all shareholders, but I don't know how strictly these laws have been enforced. Interested in comments on these situations. -Wright