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

To: valueminded who wrote (11924)	1/21/2001 4:02:53 AM
From: Don Earl	Read Replies (1) \| Respond to of 78659

Chris, Right now my wish list on stocks is pretty picky. I took a quick look at the profile on HKF and in any other market, I'd probably pull up at least the last 10Q to see what's there. There's a Hancock Fabric in my area. I went there once when I needed some vinyl fabric for a car project I was working on. The sales people were friendly and helpful and it looked like they had a good selection of just about everything. My only complaint on HKF from a quick look is the lack of cash. From what I saw of the store I visited, I'll guess most of book is made up of inventory. I'm focused more on companies where book is mainly cash and owned real estate in this market since it's possible to do so, and am pretty much sticking to companies I can buy into at or below cash where I basically get the business and other assets for free. I'm not 100% sure what to make of the economy. Obviously energy prices are putting a dent in everyone's budget. In my area residential electricity prices are getting hit with a 43% surcharge and large manufacturers are getting hit up to 78%. It isn't any mystery why manufacturing output was down in the most recent report. Some of the plants are on a deal where they get cheap rates as long as there is enough to go around, but they can be cut off if there isn't. Alcola shut down for several weeks during the last cold snap. Gas prices seem to be coming down, but they still aren't back where they should be. I still think a lot of what's hitting the market is pure FUD combined with the implementation of new accounting standards, but at the same time, it isn't possible to ignore the fact that energy issues are having an impact on the economy. I suspect the situation is more or less temporary and should level out by the end of the first or second quarter, but I also don't see any reason not to target companies with enough liquidity to weather a soft economy for a longer period if they need to. The way I see it with something like 16,000 publicly held companies to pick from, there's bound to be at least a few that will meet just about anyone's investment objectives. With the beating the market took in the last 4 months it's a bargain hunters paradise. There are obviously a lot of different opinions on what constitutes value. Value plays usually mean you have to give up something to avoid paying a premium on the stock. Out of favor sectors, assets, earnings, bear markets, analyst downgrades, losses, restructuring charges, missed expectations, etc. At a certain point, I think it comes down to personal preference on what factor/s to give up to find value. I happen to like low/no debt and lots of cash. I also intentionally look for places where sentiment is unusually low and prefer situations where there have been losses and a recent restructuring. That's the typical set up for turnaround plays. It's probably a subset of value investing, but it's the area I'm personally most comfortable with. I don't recommend it one way or the other and only mention it to help explain why some things don't fit what I do. The one thing I do feel strongly about is that whatever method a person does use, it's important to check the profiles against the filings to make sure what you see is what you get. Lots of stocks go through the roof which don't have any fundamental value whatsoever. VOXX and MOVI could fall into that category even though I don't consider either one a value play by any yardstick by which such things are measured. IMO those kind of bets are based on the assumption that enough spin and hype will eventually produce suckers who will take the stock off your hands at a higher price. The danger doesn't come from it not being a value play but from not knowing it's not a value play.

To: valueminded who wrote (11924)	1/21/2001 2:14:13 PM
From: TimbaBear	Read Replies (1) \| Respond to of 78659

On the value front, one stock I like is HKF, hancock fabrics The recent price was $4.38, and I get a NetNet value of about $1.60, so I don't see this as a great buy at these levels. They have positive CFO and FCF but don't seem to have any great vision for what to do with it to improve the business(which isn't always a bad thing, as these visions are too often disguised ways of burning cash). I like the fact that they are using the cash flow to pay down debt and to fund the pension plan and to buy back stock, all things that help reduce future overhead. But I think I'd rather look at them again somewhere down the road, maybe in the next major market swoon. I don't think you would get hurt too badly owning this one, it's just not the kind of value play yet that I'm looking for. That's my two cents, and it's worth every bit of what you paid for it! :~)