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

To: Michael Burry who wrote (10678)	6/1/2000 11:15:00 PM
From: James Clarke	Read Replies (1) \| Respond to of 78954

Re: National Presto. I'd point you to the reason National Presto dropped to its cash value (I think) - Nacco (Proctor Silex) just bounced them out of Walmart. That is not the reason to be buying Nacco now, but there are plenty of others. Anybody want to do some work on it and take me up on a discussion I'm game. National Presto is a stock every Graham value investor looks at once a year. It usually trades at a small premium to its cash balance, with management that could care less where the stock trades. Pays a big dividend. I wouldn't buy it because there is just no significant upside here - there's probably no risk either. $30 of cash trading for $30 sounds attractive, if there are other assets worth 15 or so, but in my view the other assets are worth single digits. So even if management got religion, you don't stand to make a whole lot of money. If I want to buy $30 of cash for $30 and collect a 6% yield there is a much easier way to do that - just keep the $30 in cash in my own account. A few teasers on Nacco (NC). 1) Read the footnotes, and you'll back out about half the debt. Debt is 325 million, not 600 million as it appears. 2) Adjusted for the phantom debt, multiples are 3.1x EBITDA, .3 times sales, .6 times book. 3) There is about $2 of goodwill amortization in the earnings. Add that back and you're looking at about 4.5 times earnings, and those are absolutely not peak earnings - they may even be trough if you believe the company's recent guidance. No analyst coverage, weird company, and there are plenty of warts. The stock is over 75% off its (admittedly crazy) high. Its not a great company, but its not an awful one either. I started buying a few weeks ago in the mid 40s and am delighted that the stock dropped 8 points on being bounced from the S&P (tomorrow the stock should trade about 10 million times its average daily volume). Though I doubt the price goes significantly lower. My price target is 75-100. The stock trades at 38.