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

To: Paul Senior who wrote (13754)	1/23/2002 1:21:27 PM
From: TimbaBear	Respond to of 78481

Good post, Paul!!

To: Paul Senior who wrote (13754)	1/24/2002 1:56:43 AM
From: James Clarke	Respond to of 78481

Kmart was fundamentally noncompetitive in its core business and had a poor balance sheet. Those facts were well known. If their 3Q conference call is still available on their website I would recommend it as a case study of an optimistic turnaround story that just didn't make any sense. I met with management once about three years ago and caught them playing accounting games with the numbers they were showing investors about the success of their turnaround. That made me skeptical, but the fact that I just hate shopping there was another data point. They are just terrible at what they do. I looked at it many times but the only reason I would invest in it would have been the real estate portfolio which was never enough given the debt. Maybe I could have made money shorting it, but my process is just to avoid these situations. I'm looking at another company now that is hated by analysts but is #1 in what they do by far in terms of customer satisfaction. That is the kind of situtation I want to be in. Cash flow from operations IS reported. Many companies put it in their earnings release. The ones that don't you have to ask why, but its right there in the 10-Q. This number to me is FAR more important than EPS. If you're a no-growth retailer and you don't produce free cash flow, its only a matter of time if you have debt. KM and Enron might be a positive thing if you believe as I do that a lot of valuations need to bleed hard before this market is a buy (and of course as long as you didn't own them). Complacent investors need to be scared, and now that "too big to fail" is being challenged as a risk strategy, we may see some long overdue fear. Kmart wasn't the last bankruptcy we're going to see of a large brand name company.