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

To: Paul Senior who wrote (11786)	1/10/2001 7:30:32 PM
From: Paul Senior	Respond to of 78476

Oh, the shame of it all. That'd be the steel industry and associated. CLF (Cleveland-Cliffs) cut its dividend today, and the stock has cratered. So I added to my small position. My basic assumption: as long as they control the stuff in the ground, eventually somebody's going to want it for their raw material. The risk being that that somebody would be an integrated steel producer, and those guys are slowly going bankrupt it seems. Still have small positions in other steel stocks also - X, LTV (bankrupt), STTX, AKS, BOYD, ROU, UCR. Paul Senior

To: Paul Senior who wrote (11786)	1/10/2001 7:33:21 PM
From: Madharry	Respond to of 78476

I believe that with the tech stocks, cash flows are very difficult to predict from one year to the next, let alone several years out. its is much easier to try to analyze the balance sheet and decide which of those numbers make sense or need adjustment as well as to try to get a handle on managment and their ability to execute once in awhile. then one hopes that the assets dont suddenly deteriorate in value. with respect to cash flow i think it has to be looked at in the context of the specific business.

To: Paul Senior who wrote (11786)	1/10/2001 8:34:22 PM
From: Kapusta Kid	Read Replies (1) \| Respond to of 78476

"Buy solid companies currently out of market favor, as measured by their low price-to-earnings, price-to-cash flow or price-to-book value ratios, or by their high yields." David Dreman A different opinion is expressed by Ken Fisher, author of "Super Stocks", that Price to Sales is the ticket. This was seconded by James P. O'Shaughnessy in "What Works on Wall Street". JPO is a "quant" who tested 45-55 years of data and found that the best performance was turned in by a portfolio of stocks with a PSR < 1 and which had a high relative strength in terms of price. That last fact may seem counterintuitive (especially to this thread--it is to me), but that portfolio bested the runner-up by a good margin. The second place portfolio consisted of stocks with an Earnings Yield > 5 and also had high relative strength. Apparently the momentum boys are onto something. If I remember correctly, Dreman's strategies did well in O'Shaughnessy's results.

To: Paul Senior who wrote (11786)	1/11/2001 1:36:04 PM
From: Bob Rudd	Read Replies (2) \| Respond to of 78476

Cash flow: Gabelli has 'evolved' and now emphasizes FCF instead of EBITDA. EBITDA, because it's bases on GAAP and for other reasons has serious limitations, but I use it [in EV/EBITDA]for a quick and dirty business value comparison because it incorporates debt and has the smoothness of accrual-based GAAP. By contrast, neither P/S [Fisher, O'Sh.] nor PE [Dreman] consider debt though you can incorporate a debt criteria element in screens and achieve similar results. One of the really tough things about FCF though is figuring what's maintenance CAPEX and what's investment CAPEX. Sometimes they're appropriately separated, sometimes not.