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

To: Brendan W who wrote (13728)	1/19/2002 1:09:22 PM
From: TimbaBear	Respond to of 78476

Brendan Watt First, let me say that I congratulate you on the performance of the stocks you listed for us the other day. Good Job!! Second, as to the cash flow post....I just flat out don't agree with it. If a company is using revenues to buy other businesses or to increase their capex to expand their own operations, that can be viewed as a discretionary use of cash flows, and I add the excess expenditures back in, therefore cash flow remains a true picture. Investing cash flow for wealth enhancement is not the same as never having the cash flow to start with. Just my two cents. Timba

To: Brendan W who wrote (13728)	1/19/2002 6:10:35 PM
From: Paul Senior	Read Replies (1) \| Respond to of 78476

Thanks for that link. Pretty meaty discussion there. I also see some stocks mentioned that I'm not familiar with that look interesting to me now: three in particular, finance.yahoo.com Paul S.

To: Brendan W who wrote (13728)	1/21/2002 1:30:48 AM
From: James Clarke	Read Replies (1) \| Respond to of 78476

I'm not convinced anybody at Third Avenue Value read Greenwald's book. 90% of their "critique" is on Greenwald's straw man which if you read beyond the first half of the first chapter you would know he is arguing against. To assert (as TAV did in Barrons and in the letter) that Greenwald's valuation technique is based on forecasting free cash flow is shamefully wrong. Greenwald himself ridicules free cash flow forecasting - he makes no bones about it. I've read everything out of TAV for years and this is just really sloppy in my opinion. They're better than this. Could Whitman be upset that he's not one of the value investors profiled in the book?

To: Brendan W who wrote (13728)	1/23/2002 2:22:25 AM
From: Don Earl	Read Replies (1) \| Respond to of 78476

<<<Since most going concerns consume cash, their earnings streams may be of limited value unless such flows are also combined with access to capital markets, either credit markets or equity markets or both.>>> Good post. The only problem is a company that constantly needs to issue debt or stock to stay in business is not a going concern. The Enrons and K-Marts are a dime a dozen. Everyone is hap, hap, happy with the wonderful revenue and PE right up until it's time to pay the bills. If a company is free cash flow negative while reporting great earnings, it means they are depreciating their costs at a much slower rate than those costs are incurred. Any company with a debt to equity ratio over .5 to 1, and a low PE, is a time bomb waiting to explode. That doesn't mean those stocks won't go up. On any given day there are enough of them trading at levels high enough to make YHOO at $250 look like a bargain. If the SEC were to make one rule to cure Enron type reporting, it would be to require companies to report free flow cash from operations at the bottom line. At least it would give investors an easy way to see if a company is making money or just reporting earnings. When a company has to leverage shareholder equity to obtain operating cash, there is no shareholder value. The creditors own the company.