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

To: James Clarke who wrote (9809)	1/30/2000 1:26:00 AM
From: Tomato	Read Replies (1) \| Respond to of 78480

One of his two best ideas was the long term calls (LEAPS) at 25 strike on MO Wonder if there's anyone who fits the former portfolio mgr's description whose initials aren't PL? The big question, though, is what his other best idea?

To: James Clarke who wrote (9809)	1/30/2000 4:11:00 PM
From: jeffbas	Read Replies (1) \| Respond to of 78480

Jim, the one thing Graham could not know when he wrote about overreaction to legal problems is that we would end up with a society willing to bankrupt entire industries over real and imagined problems, and real and imagined contributions to those problems. Asbestos and breast implants come to mind. Speaking as someone trained to evaluate risk, I would not touch MO with a 10 foot pole. That is because, in my opinion, one can not assess/guess the probability of bankruptcy, or even less horrible outcomes. Therefore, you can't have any idea whether the current price adequately discounts it or not. I buy stocks all the time where I can conceive of circumstances where the company goes bankrupt AND based on experience feel comfortable assigning a probabilty to that risk, and that the price adequately discounts it (GDC, for example). I can't do that with MO. (By the way, I learned this lesson up close and personal, many years ago, with an investment in Eagle Picher, which at the time was a solid company, down, cheap, but not out from asbestos involvement -- yet.)

To: James Clarke who wrote (9809)	2/2/2000 11:21:00 AM
From: Paul Senior	Read Replies (2) \| Respond to of 78480

I'm taking a position in Houston Exploration Company (THX). In some ways it fits, imo, the classic Ben Graham definition of an investment operation. THX is trading about 17 1/2- 17 3/4. The majority owner (64%) is seeking bids to sell the company. They are looking for bids of $24 to $27 per share. If they are successful in getting a buyer, my guess would be the price gap will close somewhat. (THX stock price will move up on the news.). For stockholders to get the full buyout price- that will take some time - maybe as much as 6 mo. or possibly even 1 yr (regulatory/gov't approvals). But I'm not sure of this, and so the timeframe might be shorter. Still, with patience the rough return would be 6 points (or more) on an 18 dollar stock for a 33% gain. If no deal is forthcoming, I figure the risk is time value of money. THX is now announcing gas finds, "positive reserve replacements", improved earnings. The stock has generally traded at 17 or better in the past 2 years, so I don't see a large downside risk (from 17 3/4) if no buyers are forthcoming. If there's no deal, investors should be able to "eventually" unwind their positions with little capital loss, maybe even a little gain. Just my analysis, and I've been wrong many, many times before. finance.yahoo.com biz.yahoo.com Paul