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

To: TimbaBear who wrote (12010)	2/14/2001 1:19:26 AM
From: Mark Adams	Read Replies (1) \| Respond to of 78495

Personal experience suggest mergers destroy mucho shareholder value in some cases. I agree with the idea that rushing out to buy something because of cash on hand would be ill advised. Culture clashes and mergers of equal size represent risk factors. If a big company takes over a little company, there is far less chance for value destruction. It's a personal pet peeve that wall street sometimes sanctions ill advised shotgun weddings. It's also likely that downturns present the greatest opportunity. So NPK may find itself positioned to make an offer for another company below book and accretive to earnings, with patience. If that happened to be managements strategy, I wouldn't argue with them. It's just unusual for a company to have that much cash on hand. Might have to back interest income out of earnings to get a true feeling for the operational performance. Salton has a bit more debt, after glancing at the profile. But their ROA and ROE are in a different ballpark, compared to NPK. Leverage can improve financial performance or become the lead weight around one's neck in rough seas. I would prefer to see a return to dividends- despite the positioning of sharebuy backs as a more tax efficient mechanism to distribute earnings. Dividends discourage shorts, and provide an increasing yeild as the company grows, for the longer term stockholder. One of these days I may be able to tame my trading instincts enough to qualify as one of those. <g>

To: TimbaBear who wrote (12010)	2/14/2001 1:37:58 AM
From: Paul Senior	Read Replies (1) \| Respond to of 78495

My impression of NPK is that it is one of a few stocks that value investors are always coming across, but which never seem to make value investors any money. I say "my impression" because it's just my guess. If someone actually could or did buy at lows and sell near highs of its tight trading range or just was satisfied with the dividend, then I guess it would be a satisfactory investment. Still, my opinion is that NPK has mostly - even since '73 when it was in Intelligent Investor, if I recall - been a tough one to make money in. Kind of like Genesee Beer which value investors were always finding and struggling with (if they bought it) which was around a similarly long time, and finally (mercifully for value stock screeners) taken private.