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

To: TimbaBear who wrote (12938)	8/12/2001 2:57:49 PM
From: Madharry	Read Replies (1) \| Respond to of 78773

I believe that once a controlling shareholder has proven that he has not sense of ethical behavior it is best to stay away. No matter how much of a bargain something appears to be, it isn't a bargain if you cant get your money out or if the controlling investor can milk the money out in one way or another. Look what happened to Seagate investors. they ended up being taken to the cleaners by management. I once invested in a semiconductor equipment company that was selling at a very cheap multiple of earnings net of cash where the principal had a controlling interest in the company. The company ended up selling most of its assets to another company for a very low price, and the rest of the company just limped along. In that case the investor recieved no benefit from purchasing a bargain. The principal ended up with a major stake in the other company as well as a hefty employment contract. My opinion/guess is that even if this purchase is disallowed by the courts, it will eventually take place at some inflated price and Pearlman will figure out some other way to milk the company of its assets to benefit Pearlman rather than other shareholders.