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

To: jeffbas who wrote (13894)	2/9/2002 2:47:46 PM
From: Madharry	Respond to of 78704

I would be a little careful here about using the word fraud with respect to ELN. Whether you agreed with what they did or not, it seems that it was ok according to their accountants. What ENE did is another matter entirely. And the uselessness of company appointed BODs at protecting shareholders is just amazing. Hopefully, this is one of the items that will be remedied from all of these disasters. It sounds like CEPHALON did something similar although perhaps on a smaller scale-setting up a marketing company where it seems the sole purpose was to defer reporting marketing costs for two years and then amortize them over 12 years. Seems like a good deal to me if my bonus is tied in to profits, controlling costs and share values. I wonder how many CEPHALONS are out there now. Leasing companies were notorius for using advantageous income recognition methods and then overestimating residual values. Oops- meanwhile the executives took their bonuses and headed off to new leasing companies.

To: jeffbas who wrote (13894)	2/12/2002 12:05:40 AM
From: Bob Rudd	Read Replies (1) \| Respond to of 78704

jeffrey bash <<if you had read that WSJ article you would not be so comfortable about believing there wasn't massive fraud.>>Actually, I did read it...then assigned massive fraud a 10% probability...a helluva lot higher than baseline, but a lot lower than certainty or 'highly likely'. If recently adjusted estimates of 1.46 are real then a 20 multiple would still be discount to the group. Or they could miss...but not huge, or they could find a cure for Alzhiemers...assigning probabilities to those various outcomes, I get about a 21 to 24 expected value....>50% upside from here. Enron and recent accounting focus has greatly increased perceptions of fraud likelihood the way a big airline crash increases fear of flying [The behavioral finance folks would refer to this as the availability heuristic]. I think this has produced an excessive discounting in companies like TYC, CPN and ELN. OTOH, I'm keeping my bets modest...especailly with ELN.