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Gold/Mining/Energy : T.ITE: iTech Capital (TSE) -- Ignore unavailable to you. Want to Upgrade?

To: SwampDogg who wrote (2886)	12/5/1999 11:40:00 PM
From: keith massey	Read Replies (2) \| Respond to of 5053

In regards to the discussion on book value.... Just my opinion, but in many cases there is a often a good reason why a company is selling at a discount to book. There are numerous companies that I follow (e.g ATN, CDM, FFD, FOR, KMC.U, SJD) that are selling substantially below not only book value but also cash break up value. However I would not invest in any one of those companies at these levels since it takes more than just cash/book value to move a company higher. Of course numerous companies selling below book with great management and potential stories/products are great buys but not all of them. For example, JDX turned out to be a great buy below book value. The worst one I have followed is MAR (Minorca Resources). After the BRE-X fallout MAR in Oct/97 was left with $67 million in cash ($1.80/share) and no debt. and was selling at $1.35. This seemed like a very safe investment since they were selling ~25% below cash break up value. I'm sure people bought at this level thinking it was like taking candy from a baby. I must admit that I was very tempted to invest in the company at those levels but after seeing the first couple of deals I avoid it like the plague. MAR started investing in other junior companies at inflated prices, the kiss of death. On Oct 26/98 MAR was taken over by McWatters for shares (.555 MCW for each MAR) that worked out to about .58 a share for MAR at the time. Since that time MCW has sunk down to .48 close on Friday which means the initial investment of MAR at $1.35 with $1.80 in cash would now be worth around 0.20 without ever going above $1.35.... very ugly. My own personal horror story was EAGI on the CND OTC a couple of years ago. I invested at .25... at the time EAGI had $18 million in cash and 20 million shares out and no debt. I figured at .25 how could I go wrong since it had almost .95/share in cash. Even if they broke up the company I would make out like a bandit. When it dropped to .20 I averaged down and planned to average all the way down if I had the chance. Well right after I averaged down it came out that EAGI loaned all their money to SGV and KWG without informing shareholders. SGV and KWG could not pay back the money which left EAGI broke. When the halt came off it EAGI dropped to .01. It was a good lesson for me that stocks often sell below their book value for a good reason. That is the dog I keep in my portfolio.. funny thing is that the dog climbed .02 on Friday is now .09, a new 52 week high. Who knows, through some fluke I may actually get my money back <ggg> Best Regards KEITH