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

To: Paul Senior who wrote (12926)	8/7/2001 9:54:29 PM
From: Valueman	Read Replies (1) \| Respond to of 78744

Fairfax reported today. See it at www.fairfax.ca That combined ratio is falling just as it should. It appears they are getting their house in order after digesting the large acquisitions of TIG and Crum&Forster.

To: Paul Senior who wrote (12926)	8/8/2001 10:06:38 PM
From: Paul Senior	Read Replies (1) \| Respond to of 78744

Anyone here interested in FLA at current prices?

To: Paul Senior who wrote (12926)	8/20/2001 2:31:26 PM
From: Glenn Petersen	Respond to of 78744

Barron's has a positive article on MTP this week: Power Play Shares of a Montana utility, soon to be called Touch America, look ready for a rebound No one could accuse the brass at Montana Power of having a great sense of timing. The sleepy utility has traveled a rocky road in its quest to become a telecommunications outfit boasting a 26,000-mile national fiberoptic network, in part because its effort has coincided with Wall Street's disenchantment with such companies. Nevertheless, chief executive Robert Gannon insists that the strategy will pay off. And several analysts regard Montana Power's battered stock as a steal. Though six months or so behind schedule, the utility's transformation should take effect next month, when the shares should begin trading on the big Board under the symbol TAA. (The company will adopt the name of its broadband unit, Touch America.) Montana Power will depart the stock market as the final act in a script outlined in a bullish Barron's piece last year ("Big Sky Telecom," October 9, 2000). When our article was published, the shares were trading around 32, less than half their 52-week high. Subsequently, they stumbled further, finishing the year near 21. But worse was yet to come. Because of fairly typical wrangling with state regulators, the company had to revise its timetable for full-scale operations and thus had to lower its revenue an profit projections. Not anticipated was the electric-power price surge that hit California and other Western states late last year. That forced the company to pay eight to 10 times higher prices than normal to contract for power to get on long-term power-supply contract off its books. Results: a $63 million writeoff. At the same time, Montana's Touch America unit had to contend with a price war. The flood of bad news further slammed the stock, which recently was changing hands around 7. But some industry watchers believe the selling has been overdone. Several Wall Street analysts have Strong Buy ratings on the shares and price targets of 20 or better. A big plus: Unlike most telecoms, Touch America will begin life with no debt and a fair amount of cash, as a result of asset sales, a rare situation in this debt-laden industry. Another plus: The company will be starting with what Gannon believes will be the lowest-cost fiberoptic system in the industry. Touch America's comparatively good financial health could help it succeed where others have stumbled, in part because the price war knocked some small rivals in its service areas out of business. In addition, the company's low stock-market valuation eventually could make it an alluring takeover target, although Gannon says that "we plan to continue building the company." A Montana Power shareholders meeting on September 14 is expected to provide final approval for the sale of the utility's main asset, its electric transmission and distribution system, to NorthWestern Corp. for $1.1 billion of cash. Montana Power already has raised about a half-billion dollars from the sale of other assets, including power plants, coal holdings and natural-gas and oil properties. When all debt is paid off, Touch America should begin life with $350 million in cash. Touch America sees revenues growing 10% annually over the next few years (down from an earlier prediction of 25%). This year, the company estimates, telecom operations will earn about $100 million (90 cents a share) in earnings before interest, taxes, depreciation and amortization, or a 17% margin on revenues of $590 million. ---Harlan S. Byrne

To: Paul Senior who wrote (12926)	9/5/2001 4:59:27 AM
From: Bob Rudd	Respond to of 78744

MTP: I don't have a dog in this fight, but ran across this from a 9/4 Merrill report: "We have adjusted our Montana Power estimates to remove $100MM of Qwest revenue starting from Q4 2001E. We have lowered our telecom revenue estimates from $569MM to $544MM in 2001E and from $658MM to $558MM in 2002E. We have lowered our EPS esitmates for 2001E from $0.85 to $0.84, and for 2002E, from $0.42 to $0.16. Note that we assume the utility divestiture closes at end 2001E." "Despite a low EV/EBITDA for 2002E of 3.1x, on the lower estimates, Montana Power’s P/E of 44.0x for 2002E and 31.5x for 2003E are unattractive for apparently rising risks in its transition from utility to telecom services provider, in our view." Beyond that, the analyst thought MTP v Quest ongoing disagreements would be unfavorable going forward. They maintained a 'Neutral' on it. I find it strange that the '02 EV/EBITDA is so low with the PE so high and the earnings dropping over 60%.