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

To: voodooist who wrote (11642)	12/24/2000 3:05:35 PM
From: Paul Senior	Read Replies (1) \| Respond to of 78613

Fred "I'm a gutfeel voodoo kind of investor" Andrews: rambling response.... and long too: I seem to be having a head/gut issue with TXT myself. Not even sure I can separate some of the "rationale issues" between head and gut. Consider TXT management. I've watched TXT for a couple of years - the leadership are tough, committed, results-driven businessmen/women. Is that a demonstrable fact or just my gut feeling? ROE performance (a measure of management performance for me)is generally only okay, not great. Every once in a while, I'll take a substantial position a company. Which is maybe put 15-20% of a portfolio into one stock. I'm considering doing that with TXT now, and that is gutfeel investing to me. The issue is how much more to buy and when. (Stock rose a bit Fri, but could drop again to retest lows. OTOH, as you point out, TXT has, and maybe may again, move up very quickly on positive analyst comments.) There's something not quite right with TXT - the price/value anomaly compared to its peers. TXT "should" be selling at higher prices, but it isn't. Quicken lumps TXT in "conglomerate" category, and many stocks in Quicken's list are up closer to highs than lows, but not TXT. quicken.com (aside: PPG in that Quicken list seems to me to be out of place there. DOV, a favorite of Jim Clarke in the past - may be worth a look now again.) I put TXT more in the aerospace category. And that, as you know, has been a very rewarding area for investors lately. NOC and RTN.b, discussed here at much lower prices, for example. And I seem to recall NNS, a steady double since mentioned here when a Barron's article had a write-up on it as a strong value buy. Plus BA, a double from when people here or on Buffettology thread were discussing it in '99, if I remember correctly. Something seems to be pulling TXT down. Perhaps something much more significant with the recent news that we just don't know about? That 2nd Osprey crash killing those Marines and having the crash jeopardizing TXT's important aircraft business? Or family of Mel Carnahan, the senatorial candidate who died in a Cessna, who are now suing TXT? Maybe there are recession related problems in Textron Financial that haven't been publicly disclosed? Or a general downgrading of the stock because of its automotive exposure? Maybe, now that NOC is buying LIT, the gov't won't be so willing to approve any more consolidations (assuming the gov't still wants to keep competition and alternative choices among its military equipment vendors)- so value of TXT to an acquirer is now less? And since TXT, after the merger of others, will be even a smaller player, TXT now has lesser value to individual investors? I do not know. OTOH: TXT has delivered improving results for 11 years: textron.com Dividends up, book value up. P/e down. Stock price at '97 level. stocksheet.com Imo, TXT certainly could be attractive for anybody who likes DRIP accounts, or will consider the stock for a diversified portfolio. For me specifically, if I come to believe that TXT can just maintain its earnings in the next year or two, and can keep those dividend increases coming, then I will consider taking a substantial portfolio position in the stock and holding for what I perceive to be the stock's inevitable rise. I want to issue this special disclaimer: Not only have I been wrong many, many times, but I can be, have been, especially wrong if I place relatively big bets on a stock. There is no positive correlation that I can see between my confidence in a stock or my best stock idea(s) or the size of my bet, and a subsequent rise in the stock. In other words, the results of my gutfeel investing are iffy. -g- Actually, in this market, a lot of my investing seems iffy. Paul Senior Happy holidays everybody!!