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

To: Terrapin who wrote (9255)	12/10/1999 11:57:00 AM
From: Bob Rudd	Read Replies (1) \| Respond to of 78594

Terrapin: Tyco - Tice stated yesterday that neither he nor his firm had short positions in TYCO when the report was published nor currently, but I believe you're correct that he was shocked that someone listened to the negative comments..he's used to being ignored. I sold TYCO today at a modest [7.3%] profit not bad for <1 day hold, [but could have been twice that if &^%X& TD Waterhouse had been reasonably fast and reliable grumble, grumble]. My sale reflects the opinion that I'll probably be able to reenter the position at significantly lower levels before the smoke clears on this and doesn't reflect any concern that truly ugly, Cendant style accounting issues will be revealed. TYCO's main 'sin' was making it's acquisitions look better by having them book charges [big bath] prior to completion of acquisition, such that the recovery, but not the charges, was reflected on TYCO's watch. This made growth look stronger and gave impression TYCO really had a magic touch that boosted earnings dramatically at acquired firms. Aggressive, yep...somewhat misleading, given lack of clear disclosure, also yep, but not indicating that the collection of businesses under TYCO's umbrella aren't capable of generating $2 - 2.50 in earnings in the next year and growing that at 10 - 14% or so going forward. Cash flow confirms indicating the quality of earnings ain't that bad. Based on current comparables, breakup is probably about $50. Unfortunately for TYCO's holders, the accretive acquisition game is hampered by lower valued 'acquisition currency' in addition to ending the 'hot growth out of the gate' game. Until the SEC thing is cleared up and unhappy holders that thought they had a HOT growth stock have bailed, I suspect multiple 'buying opportunities' will present themselves. Be well, bob