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Strategies & Market Trends : Range Bound & Undervalued Quality Stocks -- Ignore unavailable to you. Want to Upgrade?

To: JakeStraw who wrote (4180)	3/22/2001 11:31:49 AM
From: Jeff Guy	Respond to of 5499

Definitely agree that companies could, in most cases put that capital to better use. It does, kind of give longs a "Warm and Fuzzy" though don't ya think.

To: JakeStraw who wrote (4180)	3/22/2001 11:40:28 AM
From: BWAC	Respond to of 5499

In general I would agree. But not always. Lets consider 2 examples of stocks I own and am familiar with. AFCI. $15. $11 per share in cash. They are over capitalized in cash. It came from investments (hedged by the way) in CSCO. Its still there too. All of it. And no Debt on the balance sheet that could be paid off. AFCI in this case could really reward the long term shareholders and employees by conducting a substantial buyback. In fact they could easily (if the market participants are foolish enough to keep selling) leverage my % holding in the company by 100% through a buyback. And still have sufficient cash to operate. What better could they use the cash for in this case? Buying another company or expanding would not be beneficial to the company's owners. But using bargain prices to make me a 'bigger' owner sure would. KLIC was in a similar position a few months ago. They spent their cash on an acquisition. It hasn't helped, nor has it hurt. But it certainly wasn't best for the company owners. SCH is a toss up. Their buyback might be better served to try and consolidate the industry some. I just don't know their balance sheet well enough to say. AETH has more cash $800 Million than market value $500 Million. A fair amount of debt $300 Million, that could be paid back with the difference. And still have money left over to buy the entire float of 16 million shares. A buback is probablythe best thign they could do.