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

To: jeffbas who wrote (9697)	1/20/2000 3:18:00 PM
From: debrahaugen	Read Replies (1) \| Respond to of 78715

"I suspect (TMBS)the valuations in the industry served and the only 6% growth in software sales in the latest quarter contribute to the valuation and the downtrend. Also do not like seeing the insider sales at $17, although not a big deal." All points that I think contribute to the OPPORTUNITY here. 1.)Valuations in an out of favor industry. - When interest rates peak and turn down this company will be well positioned to participate with out of favor banks and real estate companies. However, TMBS is a REALLY a SOFTWARE COMPANY (with a P/E of less than one quarter of that industry's P/E). It competes for employees with high tech software companies, not construction employees. Very successfully too, because sales and earnings are growing at 20%+ and 50%+ per annum, respectively. 2.) Only 6% growth in software sales. - From the TMBS recent October 13, 1999 press release..."Revenue for the (third) quarter ended September 30, 1999 was $13,350,000 an increase of 21% over $11,078,000 for the same quarter a year ago. Net income rose 43% to $2,465,000...compared to net income of $1,726,000...for the third quarter of 1998." Quarterly sales increases of 6%+ (compunded)per quarter (and even faster for earnings per share), doesn't seem like a negative to me. Few companies with a P/E of 15 or less have a track record with this type of performance. 3.) insider sales at $17.00 - Good point. But a more detailed analysis shows the majority of these sales were from Thomas P. Cox, executive vice-president and age 65. Who, in the last proxy filing in 1999, indicated that he was retiring from the company. A valid reason in my book to sell shares. Salaries are also very reasonable for a software company, with the top senior management receiving approximately $150,000 per year in total compensation (salary and bonus). Compare these compensation levels, and very reasonable (not large) stock options packages to key employees, with the mind boggling compensation packages of many other technology companies on the west coast. This is my kind of management team, because they look out for BOTH shareholders and employees. I believe for these reasons and others, the company is misunderstood and therefore creates an outstanding investment opportunity. If you disagree, or I am missing something, please advise. Deb