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

To: peter michaelson who wrote (9671)	1/17/2000 3:10:00 AM
From: debrahaugen	Read Replies (2) \| Respond to of 78702

"I am a bit concerned about your un-scepticism of the CEO, tho. Every CEO has serious flaws; I wonder what his are?" A very interesting and pertinent observation. My venture capital friends tell me that a great entrepreneur can take a company to the annual sales level of $50 million. Through the sheer force of will and a dynamite personality, a true entrepreneur can and will sacrifice everything to make his/her company (baby) a success. And that is what Bakshi has done for SILW. But at the level of $50 million in sales, a different skill set is needed. One can't simple resolve a problem and, if necessary, simply do it himself. One becomes spread to thin and therefore must delegate, if the company is to continue its success in the future. That is why venture capitalists often change horses in midstream, bringing in new management to actually run the company and move the founding entrepreneur to the honory position of chairman. They do this because it is necessary for the success of the company and the venture capitalists have the power (through the funding needs of the company or actual stock positions). Obviously, with a hot IPO market, the founder opts for the public funding route and public shareholders take the immediate risk of the entrepreneur being able to be a successful manager of a large company. Yes, I know that the venture capitalists today hire the management team for the public offering only a short period before the IPO. But that is today, in stock market boom times for IPOs. In more normal times, the entrepreneur develops the company, then come the venture capitalists, then management changes, if necessary, then the IPO. Why the discourse, because SILW is today at the level of $50 million in sales, and a strong, cost conscious and hard driving CEO has successfully driven the company to this point. Can he take the company to the next level. The level that venture capitalists say is the major hurdle. That is the question. I believe the CEO has the ability to delegate successfully and build the company. Will he be successful? I can only say that the CEO is adding staff with good resumes. Will the CEO and the new additions meld into a strong cohesive management team, or will they be in conflict which results in a marginal company? There are no guarantees. Only time will tell. I have placed my bet on what I believe is an attractive risk reward investment that is not a true deep value play. But to quote Paul Senior, "I have been wrong..." Deb

To: peter michaelson who wrote (9671)	1/20/2000 12:20:00 PM
From: debrahaugen	Read Replies (1) \| Respond to of 78702

"by the way, speaking as a property owner..." Are you familiar with a company called Timberline Software (TMBS)? I happily sold my large Cort (CBZ) postion yesterday at $28 1/16, one-eigth of a point over the Munger/Buffet offer, despite a counter offer from Brooks at $29.25. I Believe Citigroup, with its 44% ownership of Cort, will opt for the friendly Munger/Buffet offer. Therefore I was looking for new ideas. I remembered spending some time in the Northwest during IBM's recent takeover of Sequent Computer. Made a nice profit because a weekly newspaper there (Willamette Week), said Sequent was playing fast and loose with its financials, and Sequent's stock tanked. The local paper was obviously wrong from my checks (Wall Street was not on the local scene)... and I bought SQNT on the false decline, and sold it shortly thereafter to IBM at a nice arbitrage profit. While I was doing my due diligence on that transaction, I ran into a small company (145 million market cap), with a management that is highly thought of by its employees, and a neat looking product. This morning I took a small position at 11 3/8 in this company, Timberline Software (TMBS). It is a software company selling accounting and cost estimating computer software for the construction and property management industry. The Company intrigues me because: 1.) great management; 2.) a neat and hopefully excellent niche product; 3.) NO DEBT; 4.) sales growth over 20%+ per year; 5.) earnings growth of 50%+ per year; 6.) price/sales less than 3 versus software industry price/sales @ 15 (excessive discount for their industry?); 7.) price/book 6/1 versus industry price/book of 15/1 and; 8.) p/e ratio of 15 versus software industry p/e of 50-60; 9.) Kayne Anderson Investment Management, who I think highly of, are the company's largest instituional investor (as of 9/30/99). Curtis Peltz, president and ceo of TMBS appears to do an excellent job and is very well liked by the employees. Employee turnover (in an area where Intel, Informix and other software companies are located), is quite low, especially for the software industry. My plan is to dramatically increase my position in this out of favor company, if and when the stock price continues to decline. My full position will be accomplished when interest rates peak, and/or interest rates start to decline. I will probably follow the bank index and/or the major banks to time the taking of my full position. This is a long term investment hold in a quality company, but a small company, with excellent management and a software product that looks attractive on initial analysis. P.S. - Kicker is that their largest holder is smart and active, not passive, in improving the value of their portfolio investments. Also a possible internet play? I wish, but in November TMBS did announce a partnership that will allow customers to post project information onto buzzsaw.com's web site. If anyone has used their products or is familiar with this company's products, please post or private message me. Deb