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

To: Allen Furlan who wrote (11045)	8/4/2000 6:05:57 PM
From: James Clarke	Respond to of 78523

re: LR I should add I would not even have looked at this company were it not a recent spinoff. Microcap spinoff = irrational sellers. This could be the most inefficient part of the stock market. And Allen, I do NOT want this company buying back stock. I want them paying down debt. If they can stabilize the balance sheet the upside is huge. Even given the current distressed situation, if I didn't know the price before I did my research I would have guessed this was trading at about $4. One could argue that the company is trading below 1x free cash flow, and it is a real business, and management is telling you on the call that they expect that free cash flow to be roughly the same next year. You've got a lot of debt above you though, so if you adjust it to an enterprise value it doesn't look like that. But I could still see an LBO at two-three times my buy price here easy. The biggest risk is that they are in a hypercompetitive market where margins are deteriorating fast. Looking at the chart of competitor IKN tells me those margins better stabilize pretty soon or somebody's going bankrupt. Maybe its LR, that's the risk. But they have the highest EBITDA margins and the lowest cost structure in the business according to management on the call today. That was what made me pull the trigger. The guy with the lowest cost structure isn't usually the one that goes kaput. Though the one with the worst balance sheet just may be. I was somewhat heartened that they have a $120 million revenue business nearly sold - that should knock out some debt. But I am not saying this is without risk, though I think I do intend to take a normal sized position in it over a few weeks of asking more questions. You guys know me - I'm no penny stock hypster. I don't think I've every bought a stock below a dollar before, though I have made good money on stocks I've bought at 2-5. But take a look at the financials of this company - this is no penny stock.

To: Allen Furlan who wrote (11045)	8/11/2000 1:36:31 PM
From: James Clarke	Read Replies (1) \| Respond to of 78523

Believe it or not I am buying more Lanier at 1/2. This is one of the most one-sided selling panics I have ever seen. The volume is incredible. Its institutions selling - no doubt about it. Where it stops nobody knows, but I just try to focus on what I do know. I do not consider this a "play money" trade despite the stock price. I've done my homework, but I am pretty sure I am buying from those who just want out at any price. Be greedy when others are fearful and fearful when others are greedy.