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

To: Michael Burry who wrote (10103)	3/2/2000 6:59:00 PM
From: Madharry	Read Replies (1) \| Respond to of 78661

That is how I understand it however, bear in mind that if you are investing in a company that is reliant upon fx revenues and its liabilities be they accounts payable or debt are in US dollars there could be trouble up ahead as all of us the ability to repay debt becomes impaired even though there is no immediate impact on cash flow. That is my understanding anyway.

To: Michael Burry who wrote (10103)	3/2/2000 7:12:00 PM
From: Grommit	Respond to of 78661

FX effects -- I am sure you are aware that many companies will hedge their foreign (net) asset positions. That would cover the exposure to FX movement in the balance sheet. But (this point was made here previously) you still have all the foreign future cash flows which will be affected by a currency movement. A company could hedge the cash flows also, I guess, or could choose to be exposed to the risk (I think this is normal -- to only hedge the asset). The effect of currency movement on future cash flows will not affect the bal sheet so will not affect present earnings (like the asset revaluation would). But it would affect the valuation of the company since the cash flow denominated in US dollars would change.

To: Michael Burry who wrote (10103)	3/2/2000 8:05:00 PM
From: Madharry	Respond to of 78661

You also have to be careful because there are lot of nuances . In some countries there is a revaluation for fixed assets which is done periodically to account for inflation. So if there is inflation and a devaluation against the US dollar and a revaluation that might wash out. if you then try to make some kind of adjustment for that devaluation of fixed assets you might be double counting somewhere. I think thses adjustments are tough to do unless you have the companies actual ledgers but I am no CPA and I am sure there are readers with a much more current and professional grasp of these issues.

To: Michael Burry who wrote (10103)	3/3/2000 7:27:00 AM
From: Madharry	Read Replies (1) \| Respond to of 78661

OT I have just taken a look at AOR- Aurora Foods. This is not a recommendation just a topic for discussion. This company buys sagging food brands and tries to rejuvenate them. A Goldman Sachs IPO at $21 in 1998. There were large amounts of insider buying in December of 1999 at around $9 a share, insiders own over 70% of the company. At that time the shares appeared to be a bargain . In February they announce that they are delaying earnings subject to an audit completion. Later they announce that earnings will be restated and that 4 executives have resigned. stock drops from the 7s into the 3s. Moody's downgrades the debt citing expectations of reduced cash flow going forward and the class action suits commence. Now it seems to me that the issue consists of when promotional expenses are expensed so that we are talking non-cash adjustments. Presumably the brand names remain intact. Has anyone followed this soap opera and are there any lessons that as investors we can learn from this?