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

To: Paul Senior who wrote (9110)	12/2/1999 11:20:00 PM
From: James Clarke	Read Replies (1) \| Respond to of 78745

Paul, you were hounding Mike about shady financial disclosure, and then you invest in Federal Mogul because its P/E is 5x. I have looked at Federal Mogul pretty carefully myself, and all I could really conclude about their earning power is that I have no idea what it is. This is a company that did something like 15 acquisitions in 2 years using an overvalued stock as currency, and now has all the stuff they bought, a fallen stock, and a mountain of debt. Does that .28 price/sales ratio include the debt? I don't think it does. The book value is goodwill. If the auto cycle turns, is there any margin of safety like you might have with a Dana? How do you have any confidence in the earnings power of this company? I'm not just beating on you - I'd be interested in knowing if I missed something in my own analysis.