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

To: Night Trader who wrote (13607)	1/5/2002 9:13:30 PM
From: Madharry	Respond to of 78684

I think that the danger in leasing companies is that they have accurately estimated the residual value of the equipment. Unfortunately in banking my first hand experience has been that leasing executives tend to inflate profits and their bonuses by taking as much income up front as possible. then moving on to greener pastures as new management comes in and takes the hit to earnings as a one time accounting charge to more accurately reflect the true market values. My guess is that the market for used aircraft is lower than it was pre 9/11.

To: Night Trader who wrote (13607)	1/6/2002 12:09:13 PM
From: TimbaBear	Respond to of 78684

martin knight A point about the article you included in your post. It says, in part: "....The stock, representing 5.6 percent of the company, was bought at prices ranging from $5.69 to $6.75 a share...." and "...."I buy on cash flow." Well, IAIS is selling at $1.67/share now and the article was reported to have been written in 2000. That means his investment has lost 70% in that time frame. If he has still held the investment, I'm not sure that I'd call that a ringing endorsement of his acumen. As far as the payment of $4.6M/QTR against long term debt....this may not be as much of a good decision as a necessity. I haven't looked at the annual report, just the numbers from the financial statements, but if I take $253M in debt and amortize it over ten years, the principal portion of the payment would be 15.7M (approx), so a little difference in rate or term would bring that in line with what they are actually paying. No discretion, just meeting the terms of the loans. When I invest these days, I like a margin of safety to back up my position. With a huge (relative to stock price) negative Net worth, I have no margin of safety here if my assumptions about cash flow take an unexpected hit. While I see your point about the most I can lose being the cost of the stock and the cost is only $1.67, I usually look at the percentages instead of the dollar amounts. (i.e. I can lose 100% of my investment, whatever the dollar amount). After all, Mr. Lieblong could only lose $5.69/share when he bought, but if he held until now, he is down 70%. I thank you for bringing this company to my attention because it is an interesting situation and history. Timba