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Strategies & Market Trends : Gorilla and King Portfolio Candidates -- Ignore unavailable to you. Want to Upgrade?

To: hueyone who wrote (29896)	8/12/2000 6:07:28 PM
From: StockHawk	Respond to of 54805

The site fails to exclude the one time extraordinary investment gain of $2.79 EPS from Q1 when it calculates those percentages. Among the many points I agree with Mr. Buckley on is the importance of excluding extraordinary one time non recurring gains from a valuation analyses. Huey, good catch. I'm lucky to have smart guys like you watching my back. The issue of non-operating items is an interesting one. Often companies are looking to move expenses to the side in an effort to say, true this cost us money buy it's a one time thing, or its related to the past, and it's unlikely to happen again. And certainly if one is going to be projecting earnings it is extremely important to remove large one-time gains like the above from the equation. However, as you pointed out, SNDK did make this money. They made it by investing, not by manufacturing and selling, but they did earn that money. If I am the owner of a business I want a return on my invested capital and I'll take it any way I can get it. So it should not just be dismissed out of hand. We are seeing more and more companies realize gains on savvy investments, such as Intel. It's another sign of good management, and I do think a Buffett-type would want to consider it. From a strict accounting point of view there is a difference between an extraordinary item and a non-operating item. SNDK's gain was not reported as an extraordinary item, so I'm not sure we can really fault the site for not excluding it. It does go to show the importance of digging behind the numbers, which I did not do, but you did. Thanks! StockHawk