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

To: Jurgis Bekepuris who wrote (10348)	4/15/2000 10:53:00 AM
From: Robert T. Quasius	Respond to of 78512

Take a look at the insurance sector. Besides CNC, which is controversial but beaten to a pulp recently and looking very cheap, there are ACL and UNM. All three are cheap relative to their sector, and relative to the market in general. CNC made a controversial decision to buy Green Tree, and the stock has never recovered. Now, management has decided to sell Green Tree, perhaps at a big loss. Green Tree has had some accounting issues, but the insurance business is solid. For those with patience, I think CNC could be a four to six bagger. I am underwater with this one with an average price of $14, yet bullish enough to sell some Jan 2002 $7-1/2 LEAPS recently. I think $7-1/2 is the bottom for CNC, and I found the $3-1/8 premium too much to resist. My breakeven point for the puts is $4-3/8, a price we'll never see. ACL has a solid management team, but was beaten down along with other insurers, due to claims from hurricanes, etc. The stock is cheap in almost every item of comparison with the sector. There has been significant insider buying of the stock. I think ACL is a double or better in 12 - 18 months. UNM has had a couple of messy quarters since the merger of UNUM and Provident. The merger has some pain, but the resultant company will dominate a number of insurance areas. I see UNM as a double or triple in the next 12 - 18 months.

To: Jurgis Bekepuris who wrote (10348)	4/15/2000 11:47:00 AM
From: Robert T. Quasius	Read Replies (1) \| Respond to of 78512

I like Terex (TEX), a construction equipment manufacturer. TEX was beaten down after guiding analysts downward for FY00 earnings. Basically, FY00 earnings were guided downward because management felt analysts were using too low a tax rate, as NOL credits expired, and one division's sales were soft. The stock got hammered as analysts lowered their estimates, but look at the ratios! Trailing P/E is only 2.15 and FY00 P/E is only 3.8! This P/E of 3.8 is in line with the guidance given by management, so the sell-off is way overblown. This stock is worth $30+ IMHO, not the present $12-13. The present management team took a company whose balance sheet was a wreck, turned it around, and made a series of good acquisitions. There is still a fair amount of debt on the balance sheet, and management says it will pay down $200 million in debt this year and buy back 2 million shares out of their strong cash flow. I also think there will be somewhat of a pause in the string of acquisitions, while the new acquisitions are digested, and also grown. If you like this one, buy before earnings are out on 4/26. Management can't buy any shares back right now, and they are sure to buy more after earnings are released. I think the earnings should be pretty good.

To: Jurgis Bekepuris who wrote (10348)	4/15/2000 7:53:00 PM
From: Paul Senior	Read Replies (2) \| Respond to of 78512

Jurgis, Jim Clarke. Well, I agree with Jim C. in that I'm not seeing or experiencing "compelling" buys. Which is a surprise to me. I would've expected lots by this time. But my view is very much different from your perception, Jurgis, that "everything's so overpriced,that I did not find anything to buy after this 30% drop." (Assuming we're talking about value-type stocks.) There are still many, many good value stocks out there that could be bought now, and possibly should be now by value players. Although of course, it's definitional also-- how we each define "value stock" or "compelling". Still, if you are able to find and read the newest (4/13) issue of Barron's, there are now articles mentioning the "undervalued-ness" of stocks that have been discussed on this thread several times. For example, a full article devoted to Fleetwood Enterprises (and mentioning some mobile home competitors like Oakwood, et. al.), valuation estimates for American Airlines, and some others. (aside: I have a tiny position in AMR, and added to FLE recently). Jim, if I understand what you are saying, you are looking at a bottom kind of signal when companies are being bought for cash or by insiders. I don't exactly see that happening now, but I do see quite of bit more consolidation (buyouts for stock or combo stock/cash) in a couple of industries. This would be food especially. Also building supplies and some insurance. Perhaps a tad with home builders. I take all this as a positive sign. JMO. Paul