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

To: Madharry who wrote (13832)	2/3/2002 5:48:39 PM
From: Bob Rudd	Read Replies (1) \| Respond to of 78774

Madharry: As a value investor, I often buy companies that have visible warts and bad news. This drives the price to what looks like an undervalued level. When I say "its not worth 40 but it is worth mid 20s" I'm making a speculative judgement call based on the fact that most of the info in the WSJ report had been made public before, despite this, Merrill [and other analysts] still had strong buys on it & Paul liked it...at 40+ prices. For me, this didn't provide a sufficient margin of safety...but at a 45% discount, I was, and am willing to gamble...when a chunk of the gap was filled...I dove for the sidelines. I've made money in the aftermath of accounting problems in companies like Cendant [Which I currently hold] and have not done so hot on others like TYCO where I'm modestly underwater. Some situations, though..."I just say NO" IMCL is one of those...It was looking interesting till I read the NYT article: Message 16953200 I put that together with "1 product company" and the hoaky way they blew the filing...I think it's all smoke. ELN is not the same...I beleive there's a diversified and valuable portfolio of product & research potential mixed with some stinky accounting that makes it difficult to really evaluate the earnings. But with R&D based companies, even if the accounting is conservative, you've got considerable uncertainty...Only rarely does the market offer a price that overdiscounts that uncertainty...I see low - mid 20's as that price level for ELN...others will see it lower or higher...that's what makes markets.