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

To: Allen Furlan who wrote (11072)	8/12/2000 12:44:36 AM
From: peter michaelson	Read Replies (2) \| Respond to of 78525

Some preliminary questions re LR: ($ in millions) About 85 million shares at 1/2 is $43 market value of common as against a $155 book value. But how much of the book value is good? I see $116 in intangibles. Then there's a $218 notes receivable, presumably from financing sales of equipment - how good is this? Then there are the $600 in receivables and inventory. It would take just a small percentage of write-off to produce quite a hit to book value. The inventory in particular worries me. Why do they have so much? Unless I am missing something here, I would not count on any book value at all, perhaps negative. OK, so what about earnings value. We need enough value from earnings to to offset the $680 of debt. Firstly, does anyone understand why there is a $400 administrative and selling expense? Is that not a lot f money for sales of $800 and service revenues of $600? Perhaps sales commissions are 25% to get machines sold for their service revenue. In any case, I am seeing about $110 and $130 of operating profit in 1998 and 1999. This year looks like perhaps $120. I would be hard pressed to put a high multiple on this business, what with declining sales, the threat of digital imaging, etc. How about a 10x PE, or about 6x operating profit. $720 total value against $680 of debt. $40. Perhaps a stock price of 1/2 is right. OK, you guys do deeper work than I do - where did I go wrong? Peter

To: Allen Furlan who wrote (11072)	12/2/2000 9:12:24 AM
From: Kathleen capps	Read Replies (1) \| Respond to of 78525

"...how much lower can stock go? I will add 1000 share blocks (big spender) weekly for next 6 or 7 weeks." Alan, I want to commend you for your tremendous patience and ability to take the 'long view'. At the time you wrote this message, I though "how foolish, he's going to miss the big upswing...why not just buy the whole position now and not risk losing out?". I have this tendency to jump in too soon, and then get impatient waiting for the market to realize the value (or do something, anything - react in some way.) I have the hardest time just being patient and waiting the weeks or months for things to work out. When they don't go my way, right away, I tend to get out and jump into the next "best idea". Thank you for the valuable lesson in "the long view". Thanks also to Paul Senior for sharing similar examples too numerous to count. I'm always knocked out by the disepline demonstrated in statements like "...in a couple of years..." or "...opened a small position and am accumulating..." Thanks for a great thread.