Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: Brendan W who wrote (13926)	2/13/2002 5:53:06 PM
From: Brendan W	Read Replies (3) \| Respond to of 78670

More sources than uses. Starting to sell Owens Illinois (OI) in the $12-13 range in a non-taxable account. Average cost is $5+. Discussed this fall Message 16551293 . Applying proceeds to existing positions in Safeway ($40.xx), Sealed Air($40.xx), Cadbury Schweppes ($25.xx) and Boston Properties ($36.xx). OI is supposed to earn almost $2 a share this year, but it looks like their existing asbestos reserve of approximately $300m is not enough given the quarterly $59m quarterly run-rate on claims and their insurance is almost tapped out. Sold Moody's ("MCO") at $39.60 in a non-taxable account bought in 5/2000 for $23. So far the company seems to be deploying teflon in their role in Enron. In my view they deserve a minimum $100m judgment for giving Enron the investment grade rating, and then $300 million for keeping it as long as they did. I am going to the sidelines because I hold in a non-taxable account. I consider this a core holding, but hold nothing now. I replaced it with Monsanto at $31, the global leader in agbiotech. Monsanto is supposed to earn $2... we will see. I was encouraged to read that third world farmers are using the technology (mostly illicitly). Sold American Management at $19.96 in a non-taxable account... average cost $13. Discussed Message 16481370 in October. It was just a little too expensive for a non-taxable account. Replaced this with First American Financial ("FAF") at $18.40. FAF is a title insurance company with a leading 30% national share. Trailing earnings are $2.04, forecasted around $1.74. These may represent peak earnings because of the national level of refinance and real estate sales. Book value is in the $15s. I listened to their conference call today and like the story. Title insurance seems like the lowest risk insurance business out there if you do it well. (A real estate attorney friend says FAF is perceived the quality leader among title companies in Colorado.) I believe Marty Whitman started a 3 million share position last year in his "3rd Avenue Trust". Debt is rated baa2 by Moodys. The public title companies do 85+ percent of the national title insurance. There are cheaper companies than FAF on a P/B basis, such as LFG. LFG has an unfortunate event in their history (Commonwealth acquisition) however where they diluted existing shareholders by a gigantic amount. quote.yahoo.com I also added to Paul's Jakks Pacific at $18.70. Flat organic growth but the Toymax acquisition looks good to me. I'm not touting JAKK at these levels because there may be a tsunami of odd lot sales after the TMAX acquisition closes. I am still taking the position that cash s**ks. I also started a position in School Specialty ("SCHS") at $26. The company "...is a direct marketing company for supplemental educational supplies to schools and teachers for pre-kindergarten through twelfth grade....". They are a consolidator that is the schools alternative to ODP, OMX, SPLS. This is a growth by acquisition story where management is aggressive with the amount of debt on the balance sheet. However, credit quality of their customers is not much of an issue. The company forecasts earnings of a $1.91 for FY 3/2003, and the CFO (who sounds credible on yesterday's call) says they expect free cash flow to approach earnings on an ongoing basis. Companies discussed: quote.yahoo.com