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

To: Keith J who wrote (16178)	1/16/2003 8:11:29 PM
From: TimbaBear	Read Replies (1) \| Respond to of 78711

Keith Jamison Anyone looking at ACF here? Book value is 12.50, still supposed to make over 70 cents in CY03. Risks yes, but seems very discounted here under 4. Looks like the 50% drop today was the result of this news: biz.yahoo.com Of interest was the last paragraph: ""We now question the viability of AmeriCredit's business model," wrote Joel Houck, an analyst with Wachovia Securities, on Thursday. "We believe this is the third time management has had to make significant revisions to its earnings forecast, including two write-downs of its receivable. With no signs of improvement in recovery values of used cars and continued weakness on the part of the consumer, AmeriCredit is fighting major headwinds in 2003." (Houck doesn't own any AmeriCredit shares, but Wachovia has had an investment-banking relationship with the company in the past.) I don't like finance companies for just this reason. As an investor, I have no way of quantifying the risk involved in the loan portfolio. Therefore, it is always a surprise announcement of "much worse than expected performance" that either forces the investor to wait and hold the suddenly worth 50% less investment and see if the market will give some of the loss back, or to take all the loss at once and move on. There are folks who believe they can correctly figure out this risk profile, but I don't happen to be one of them. My guess is that they never recover. But that's all it is....a guess. I'll pass. TimbaBear

To: Keith J who wrote (16178)	1/16/2003 10:19:08 PM
From: Paul Senior	Respond to of 78711

Keith Jamison: you'll want to double check those earnings estimates. I find, from Smartmoney.com, reported by Yahoo: "Management also lowered its outlook for all of fiscal 2003. AmeriCredit now expects to earn between $70 million and $80 million, or 45 cents to 51 cents a share, for the 12 months ending in June. (edit: that's a p/e of maybe 8 today.) First Call's consensus estimate was for 65 cents a share." At current price, it might work as a trade. I don't see a compelling buy, but it could be. My fav in the sector is WES, and that's going for 12x eps (before it might announce its own problems). I've got ACF on my watch list. If it retests lows on no further adverse news, I might be a buyer. Once used car prices stabilize (assuming they do) under the zero percent financing scheme (which encourages trading in of used vehicles and results in an excess supply of them), ACF will be viewed more favorably by the market, imo. Paul Senior