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

To: Paul Senior who wrote (12403)	5/3/2001 5:20:44 PM
From: Bob Rudd	Respond to of 78740

Paul: I still have AREM with avg cost 14.90, but it's grown to a large position for me [Though still less than 5%]. The case for AREM as value stock rests somewhat on WEB's assertion that growth is NOT separate from value, but a key determinant of it. I see very good potential for 35 - 45% growth for 5+ years. With a PE on '01 of 12 [based on 15.24 & 1.27 EPS] This kicks out a PEG of .3 vs Ent. software universe with PEG 1.2. And while the valuation of the group may have been high a year ago, the Nasdaq drop has brought it to earth - a PEG of 1.2 isn't stratospheric. One problem with buying 'value' techs is whether growth will continue. Two key aspects of this are inventory [software companies have none, while hardware guys are writing it down like crazy] and customer base. Some tech sectors like telecom and internet that were part of the over investment bubble will take quite awhile to absorb that. OTOH, AREM's customers are ordinary businesses that weren't subject to the bubble. Another risk factor is integrating acquisitions - their track record has been excellent on this front, so I'm not that concerned. The deal structure on their recent Globalsoft acquisition was fantastic for AREM. This isn't a simple, run the numbers, buy the stock situation, IMO. If you're going to build a significant position, it's important to read the K, check out the presentations on their web site and the conference calls. Get a feel for the open-ended potential of their strategy. Bottom line: I still consider it a value stock, with growth an important component of that value, and would be buying it today if I didn't already have a full position.

To: Paul Senior who wrote (12403)	5/3/2001 6:28:34 PM
From: doug5y	Read Replies (1) \| Respond to of 78740

Hi Paul, I'm in on AREM as of yesterday at $16.52. Guess I'm a little less patient than you. Yeah...up 50% already - I know. Also picked up USG on Tuesday at $11.37. Don't think anyone else on the thread has been discussing it. Impossible for me to value due to it's asbestos liability. My motivation was based on WEB, Marty Whitman, and Bill Nygren buying at higher levels. I'd been following it down for about a month. Yahoo! USG thread as some good discussion on it. Also considering FRONY...