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

To: Wallace Rivers who wrote (14491)	5/18/2002 9:06:42 AM
From: Grommit	Respond to of 78547

ALD - I think it fair to say that the write down of those assets would be relatively small. The company points out that they are required to book at lower of cost or longterm value, not market. And that sometimes market does not represent the value that ALD can extract in a workout. If they are a little slow to write down some underperforming assets -- Merrill Lynch mentions that, in fairness, they are slow to write up assets too, when there is a market value established. M/L cites Rhino equity as an example. (Over a quarter or two, most assets long-term value and mkt value come into alignment. If they ever diverge in the first place.) I think a bigger issue is the concentration of assets in a few companies like BLX, Hillman, WyoTech. ALD claims that the companies are doing fine. The announced sale of Wyo in April, supports the view that the books are conservative, at least for that asset. (Wyo sold at price much higher than basis/book value). ALD seems not to be playing balance sheet games to me. So the valuation of the other large holdings is probably OK. But if they were to go south, it would be a worry. The company touts it's extensive work-out capabilities. Again, that concentration is probably the biggest risk, in my view, otherwise their assets are extensively diversified. They are promising more visibility, recognizing that these companies are privately held and no one wants to divulge info which might help competitors or customers. grommit