Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: Paul Senior who wrote (8717)	10/22/1999 2:49:00 AM
From: Paul Senior	Read Replies (1) \| Respond to of 78650

I am still finding new possibilities that I like, and I am starting small buys in them. For example: Trinity Industries (TRN) In several businesses. Primarily known as a rail car manufacturer. But they are increasing their presence in the highway construction market (and converting a railcar manufacturing facility to this potentially better business). A possible beneficiary of the Highway Construction Bill. They describe themselves as "one of the nation's leading diversified industrial growth companies. Trinity operates through six principal business segments: a Railcar Group, an Inland Barge Group, a Parts and Services Group, a Highway Construction Products Group, a Concrete and Aggregate Group, and an Industrial Group." (-g-So why they call themselves Trinity, I do not know.) Of course TRN's financial ratios look very good to me. Low price/bk, low pe, stock hitting new lows. They just reported record net income for their second quarter. Although I would expect the business and earnings to be more cyclical. And maybe they will be. Could be that it's already "maybe" "somewhat" built into the low price of the stock though. The price to value here looks good to me. Ogden (OG). A messy and messed-up conglomerate. Changing their focus midstream is costing them a bunch of money. The head man wanted to increase entertainment division business. But in a disagreement with the Board of Directors, he left and the BOD are looking to split up the company. Lots of debt. Dividend, of course, just recently eliminated. Stock has dropped a bunch and now looks like it's at about a 12 year low. A really interesting thing is that Greenway Partners has just taken an approximately 10% stake in the company (purchased in open market - I think). And Greenway is expert at helping turn around problem companies (or so I have read). ZD. Undervalued based on its relationship to its internet stock ZDZ. This was described in Barron's On-Line interview last week, with a Mr. Higgens in an article on value investing. He is a relative value fund manager who believes in fallen stocks regressing to their mean. That's an idea that works (sometimes.) Nacco Industries Class A. Well, when I started buying yesterday (Wed.) before earnings came out, it was selling at book value. Down 12 today to about 52 on low earnings and poor prospects for next quarter. This is a company that is in three businesses: Fork lift trucks (manufacture and distribute - they are a big player in this area), surface mining of coal, houseware appliances. It is a company very subject to interest rates, economic conditions, foreign exchange rates. There are only about 8 million shares outstanding. Year over year growth in sales is slow , but generally up. Book value has doubled in past five years, and LTD has been halved but then increased as of last year with the buying of the forklift business from another manufacturer; dividends have increased every year since '93 (as far back as I can go). ROE looks to be about 13-17% (excluding high and low years). Nice little conglomerate business. One way to value it might be by a multiple of its EBITD which I see was about $28.50/sh. Right now though, I would not recommend purchase (although I myself have been adding today as the stock has dropped). Earnings announcement, low float, high absolute stock price, lack of street interest – this stock could drop a lot further before it bases. And it may take a year or more to recover. But I bet it will. Good investing all, Paul

To: Paul Senior who wrote (8717)	10/22/1999 12:43:00 PM
From: jeffbas	Read Replies (1) \| Respond to of 78650

You misquoted me, Paul. In post 8710 I said the TWO most important things in technology investing are management and growth. I agree that quality of management is sometimes hard to determine. However, I would say that it is a lot easier to determine in technology than elsewhere -- in technology poor mgmt rapidly becomes apparent in market position inferior to similar peers. In the specific example I gave in that post and that Armin gave in his response, the investment failure was focusing on balance sheet strength and safety, rather than growth/market position. Your point is well taken about buying both stocks. However, I do not believe that I have the skill to follow a large portfolio and I like to have a degree of concentration where a success (or failure) makes a difference. I have always felt that no more than 10-15 stocks met my skills and provided some degree of diversification. I generally subscribe to Buffett's view of not diversifying, and trying to know the companies as well as anyone. I usually talk to the CEO, and try to establish a relationship over time and am happy holding stocks for many years.