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: Paul Senior who wrote (15330)	8/26/2002 3:32:58 PM
From: TimbaBear	Respond to of 78595

Paul SWRG looks like an interesting play. TimbaBear

To: Paul Senior who wrote (15330)	8/26/2002 6:38:41 PM
From: Bob Rudd	Read Replies (1) \| Respond to of 78595

SWRG <<little ltd>>Unless you count Op leases: From Q 'As of July 1, 2002, our future minimum lease payments of our headquarters and restaurants are as follows: 2002--$2.5 million; 2003--$5.2 million; 2004--$5.3 million; and thereafter--$66.7 million' This ~80mm is over 2x the 32mm market cap. None of the above should be construed as a negative take on SWRG, just food for thought when investing in restaurants and other businesses with lot's of buildings. I'm frankly not sure just how to incorporate off balance sheet obligations, like Op leases, but I'm pretty sure it's a mistake to ignore them. So far, I'm incorporating them in EV multiples as if they were LTD, but either putting lease payments in the denominator or discounting the Op lease total by 33% to adjust for interest. From a strictly balance sheet perspective, it may be improper to just plug them in as debt since they are a form of financing...If the buildings were conventionally owned and financed, the buildings would be shown as assets offset by the mortgage debt liabilities. So if the Op leases are considered a liability, some sort of offsetting 'asset plug' would seem appropriate so it approximated the owned asset/mortgage approach. Not sure what to use for this, but just dropping the op lease total in without some sort of balancing adjustment doesn't sound right.