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

To: James Clarke who wrote (10311)	4/9/2000 5:37:00 PM
From: Robert T. Quasius	Respond to of 78595

CNC did refinance recently, with an equity infusion from a private investor who has a good track record in picking undervalued stocks. Insiders have been huge open market buyers of the company's stock, and in fact now own around 20%, if I remember correctly. However, it turns out the company has been guaranteeing loans for employees to buy stock, and the Street doesn't like that too much. Personally, to me a debt is a debt and if insiders are willing to be massive buyers of stock on margin, then that is bullish. Free cash flow, by definition, is operating cash flow minus capital expenditures and other similar commitments. Hence, asset liquidations, since they are one time gains/losses, are subtracted out in determining operating cash flow, would not increase free cash flow.

To: James Clarke who wrote (10311)	4/9/2000 11:50:00 PM
From: jeffbas	Read Replies (4) \| Respond to of 78595

Trained as an actuary, I have a bias against investing in a bank or an insurance company. The simple reason is that the liabilities are real and the equity base is usually too small a percentage of the assets for me to feel comfortable to "leave the driving to them", since I can never know enough about the invested assets to be comfortable. I saw the 100-year large, old-line Mutual Benefit Life Insurance Company go down the tubes because of too aggressive real estate investing. On CNC, equity less good will is about $1.4B or 3+% of assets. In my opinion, buying into such a leveraged business when there is turmoil is really asking for trouble. It's for speculators only, not prudent investors.