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

To: Madharry who wrote (11388)	11/2/2000 7:15:38 PM
From: Bob Rudd	Read Replies (1) \| Respond to of 78628

Madharry RWY: Im looking at it right now. If you ignore the contingent liability of shareholder suits and accept their preliminary estimate of roughly $35mm non-cash hit to 2000 earnings, it looks like a screaming buy. But ignoring that legal hit is like ignoring a full size alligator in your swimming pool. The market cap hit was about $425mm based on prior share price - current share price * shares outstanding. And then there's legal costs, punitive damages and whatever. I wish I knew a reliable way to estimate the hit they're gonna take on this but, considering the unpredictability of the judicial system, I don't. And until I get a bit of handle on that, I'm not jumping in the pool with the alligator.

To: Madharry who wrote (11388)	7/3/2001 1:14:02 PM
From: Bob Rudd	Respond to of 78628

RWY, Post 10k filing. I posted this on Yahoo post.messages.yahoo.com What is the investment case for this? Looks like income and cash flow are negative before extraordinary items, so it's hard to make a DCF case without assuming a dramatic turnaround. Lenders are going to extract substantial concessions IF they don't force it into BK as indicated by the 'going concern' warning [Which are rare and dire contrary to comments on this board, IMO]. The increased borrowing costs won't help already negative earnings. It's hard to make a net net asset case when one considers that rental furniture inventories must be marked down on close out and goodwill is questionable at best when dealing with 'going concern' assets. Buyout: I got an EV/EBITDA [not including Dep for rental furn as that's ordinary expense in this biz] of 19.5. Given the distressed situation an EV/EBITDA of 10 would be high - there's plenty of good businesses selling below that. EV/EBITDA based on net debt only, 0 Equity, would be 12.9. So it's unlikely buyers are going to line up to pay a premium to current levels. I know, it sounds like I'm ripping this to shreds, but I'm not short and I am looking to find the 'PEARL' in this ugly looking oyster...if there is one. I sincerely look forward to hearing from informed longs on why this is a great buy at these levels.