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

To: Broken_Clock who wrote (10653)	5/30/2000 1:24:00 AM
From: Paul Senior	Read Replies (1) \| Respond to of 78954

Papaya King: re. your question: "Do you have any favorites among the steels?" That's an interesting and more complex question than I first supposed. My reactive answer is all the steel stocks are ugly. There are no favorites. They mostly are all near lows (the ones I look at or own anyway) and when (if) one rises (assuming it's not for a buyout) they may (imo) all be rising in tandem, so choosing a favorite "best" might not be necessary. I see that your STLD is a mini mill operator. I'd guess most people would consider NUE the mini mill leader. It's trading at lows only seen once before in the past six years. A competitor to STLD is BS. I like BS at its current price. It's under 4-- That looks like a 30 year low. In the past, people who've bought BS around 10 and held for a few years have seen a double. Right now though, it looks like the capital intensive nature of the business has caused Bessie to increase both number of shares outstanding and amount of long term debt. That's scary (to me) and the reason I hesitate to start a position. If you consider steel stocks now because they've been hitting lows, then there've been a number of possible selections -whx, ltv, rou, et. al -from which you might choose. I've had SCHN on my watch list waiting for it to drop a bit more. Right now, although I own a few steel stocks (e.g. AKS) I'm wondering if the opportunities aren't better with suppliers to the industry. Their stocks are down near lows also. Two that I own are UCR and CLF. (Also trucker BOYD, an intermediary between steel companies and their customers.) fwiw and note, since I'm the only one so far responding to your question: If this post reads like I actually know something about the relative merits of individual steel stocks or know about the steel industry, well I don't. And even worse, I have been wrong many, many times before. Paul S.

To: Broken_Clock who wrote (10653)	6/1/2000 10:28:00 PM
From: Michael Burry	Respond to of 78954

An interesting way to play steels is the graphite electrode business, which is dominated by one company that currently seems relatively cheap. They have net negative equity thanks to a huge charge taken against earnings back in 1997, and continue to to be affected by lawsuits. But they recently restructured debt, shaving 200 basis points off previous rates, and have announced price increases. I like their reason: We continue to see strong order demand for graphite electrodes. We believe that graphite electrode manufacturing capacity utilization rates in the free trading markets are approaching the 95%level. We also believe that these high operating rates are beginning to cause shipment/scheduling difficulties for some of the other producers. As a result, we have announced a price increase of $150 per metric ton for graphite electrodes sold in Western Europe, Middle East, North Africa and Asia Pacific(excluding Japan), effective for all orders booked on or after April 3, 2000. Mario Gabelli has had several of his investment arms buy decent stakes, and there is a good amount of insider buying. All this occurred at prices above recent prices. Gabelli has not yet invested his own money. I find that when he does that, usually a bottom is near. But I'm likely to take a position in UCR anyway due to their pricing power and misunderstood/hard to understand financials. Another interesting one to watch (and one Gabelli also owns) is WHX. An early favorite here on the Value Investing thread, several of us doubled or tripled our money. Like a good value investment, it has round-tripped back to the 5's. New lows recently. Has shown the ability to jump quickly. But extraordinarily leveraged. As I mentioned on my web site, an interesting one to watch from the sidelines. Good investing, Mike Burry