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

To: Ryan Hess who wrote (2678)	11/11/2000 3:28:16 PM
From: Paul Senior	Read Replies (1) \| Respond to of 4691

rhess, thanks, appreciate your comment on EIX. As you asked, here's how I came to EIX: I found EIX when I saw published articles in July saying there was a power shortage in California. More than actually seeing such articles though, was a confluence of events: 1. I came to believe there was a problem. (There've been articles for years saying there's a looming shortage of electricity and I never paid any mind to them.) 2. Energy providers were getting ever more expensive - I missed a 20 bagger on CPN (discussed on the value thread in maybe '96 or '97, --It is specialized in a specific area of energy generation, but I hadn't any idea there REALLY could be a growth stock in energy business), plus I also missed SGR. 3. SGR provided an important clue that something positive was about to occur for utility investors. SGR is imo, THE dominant designer of piping systems for utilities. The stock dropped sharply on poor earnings (lack of orders too, I believe) at the end of '98. And I recall discussing it then on the value thread after the stock dropped to around 12 or 10 or below. We all passed on it at the time and subsequently. (I am guessing, since the stock's not been mentioned by anyone after that brief discussion.) There is just something about coming back to notice the stock you've dismissed as unworthy and seeing it up double or triple. It just - to me - smacks you about the head and gets your attention. About July (2000), I am noticing CPN up a TON plus SGR is now (18-20 months after the value thread discussion) a 5 bagger for somebody (not me) at about $50/sh (And today it's about 74 down from its high over 90.) Looking a little closer then at what was happening to stocks electricity related, many were up. I saw though that EIX, at $19/sh was not. I believe that EIX is likely never become anywhere near the good investment that CPN or Enron or some of these other energy providers became, but... I realized that if EIX, the dominant - monopolistic? - energy provider in Southern California (13M people), was to lose some of its dominance, it was at least trying to diversify or deal with the deregulation of energy that was occurring everywhere. Coupled with a 5% dividend yield for some downside protection, a strong likelihood that S. California would grow and its energy needs continually increase, I took a position. My error - or at least what's causing me to exit - is that I just assumed (incorrectly) that EIX, which apparently had to go outside its normal channels to procure electricity to prevent rolling brownouts, would be able to pass those costs on to people who consume the electricity. Within the past month or so, I now see that that may be up to the political or judicial process. It's just too complicated for me. I've exited Warren Buffett stocks before - and before Mr. Buffett said that he was out -- and in every case, I've been wrong to do that. Again, my belief is that Mr. Buffett has never lost money when he's taken large stock positions. For EIX, that was reported as $18.9M, or $20.52/sh. (EIX closed Fri. at 22 13/16.) I've just lost confidence in what I'm about regarding EIX, and I believe the stock will dance around as the legal and political process plays out. Also, I would like to read of some support from Buffett followers here. If I'm the only guy on the thread who's owned or owning EIX, that is a sign that maybe it's very true that the EIX situation is complicated enough to leave to professional analysts or tough and lonely enough that strong nerves indeed will be required to stick with Mr. Buffett on this one.

To: Ryan Hess who wrote (2678)	4/19/2001 5:19:22 PM
From: Paul Senior	Respond to of 4691

Okay, I'll take a very small position in Bell Industries. The numbers work for me based on what I use to screen for distributors. What's troubling is that the company is much more than just a distributor. I'm surprised that I'm looking a disparate conglomerate business - with at least two segmented businesses that seem to be dependent on working with state-of-art technology (Strategic technology consulting, information technology infrastructure provider, distributed high current SMT toroid inductors -- yikes!) This is a Buffett investment?? I can't figure Mr. Buffett's buy-in price. I'll guess maybe $1.75/sh, if he bought early Nov. Nor can I tell his second but very minor purchase price (announced Feb.?) - maybe $2.25, maybe $2.50. I'm coming in now a bit over 2.5. Not where I want to be, but close enough to start. Mr. Buffett sold his position the last go around at over $5 (Not sure) very quickly after he bought (was that around $2 1/2?)after it ran up as a result of media attention. I will guess and presume that a reasonable downside to the stock is about $1.75, i.e. given what the market knows about BI's business right now,and the inevitable ebb/flow of the stock. In a market crash, of course BI stock could go waaay down and stay there. Or if there's unexpected very bad news with BI's business(es). For the upside, I see no evidence that BI's financial strength or its business model or business prospects are deteriorating. (-g- although it's true I don't see so well.) If I'm correct, I would not expect Mr. Buffett to sell his position until BI hits at least 5 again. And I assume Mr. Buffett has an expectation that that will happen again too. I notice that BI management isn't unwilling to make changes to their business models - exiting electronic distribution business, beefing up consulting business. (I can't figure how that all squares with my interpretation of Mr. Buffett's preference for constancy is good, change is bad). There was a stock buy back (about 860,000 sh. at $3.43 avg/sh) last year. No recent insider buying that I can find. Looks like if I want my $5/sh. I'm going to have to be fairly patient. No catalysts in sight, no earnings visiblity that I can see; it's a mishmash small cap at an okay price in a sea of okay small caps whose prices are okay. Only significant claim to fame for BI is that Mr. Buffett is an owner. Maybe that is enough though. Paul Senior