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Strategies & Market Trends : Mr. Pink's Picks: selected event-driven value investments -- Ignore unavailable to you. Want to Upgrade?

To: Sir Auric Goldfinger who wrote (15684)	8/7/2001 11:45:58 PM
From: Druss	Respond to of 18998

Auric--<<every short in the world worth their salt had sold it short.>> Guilty as charged and more than once too. It fell off my watch list for a while but I am ready to go for round four with it. It always seems to deliver. All the Best Druss

To: Sir Auric Goldfinger who wrote (15684)	8/10/2001 5:56:17 PM
From: RockyBalboa	Respond to of 18998

True...but one question remains. Is it crucial that insiders do not sell stock? One of the salted club crackers... when it comes to CNC biz.yahoo.com ... Sugar Smacks Conseco's treatment of its bad loan reserve also smacks of earnings management. Because additions to the reserve must be treated as an expense, companies often go light on them to meet numbers. At Conseco, this so-called provision slipped to $118 million in the most recent period from $121 million in the first quarter, even though the number of delinquent credits and actual losses to bad loans rose in the second quarter. At $118 million, the provision was just 103% of losses in the quarter. If the provision had stayed at the previous quarter's 113% of losses, it would have been $130 million. As such, Conseco Finance's revenue would've been lower by $12 million. That's $7 million off of after-tax earnings, or about 10% of total net "operating" income in the quarter. Conseco also failed to say how much cash Conseco Finance is providing to the parent. True, a cash flows from operation number was in the release for this unit. But this measure doesn't give an accurate picture of overall cash generation at Conseco Finance, as it leaves out how much cash the unit is spending making guarantees and advances to the trusts that fund the company's loan-backed bonds. These flows are buried in the investing activities section of the cash flow statement. The guarantee payments are triggered when credit quality indicators rise above a certain safety level, as is now the case with many Conseco bonds. The advances, meanwhile, have to be made when loans aren't being repaid as quickly as the bond's architects expected. This slower repayment appears to be the result of alleged efforts -- like extending and transferring loans -- to suppress delinquencies. When these extension and transferal methods are employed, principal and interest are added to the back of loans, thus reducing interest and principal flows in the near term and making cash advances necessary. There's more trouble brewing: With the stock falling to around $12, Conseco will almost certainly have to book extra provisions for loans that were made under the old regime to senior executives to finance the purchase of Conseco stock. Great quarter, guys.