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

To: Bob Rudd who wrote (16700)	3/29/2003 9:15:44 PM
From: jeffbas	Read Replies (1) \| Respond to of 78625

Bob, on HRC, I look at it differently. Most people do not have the skills to analyze the filings in the detail needed to find anything. I think HRC had two red flags: -Excessive leverage. Debt to tangible book value was something like 3 to 1. Whenever you are at the mercy of government reimbursement for your survival, good will becomes very suspect - as it can instantly become worthless. -The CEO has been considered somewhat controversial for a long time. I think management should always be your number one investment criterion, to the extent you can make a determination - and you should run the other way if any doubts are raised.

To: Bob Rudd who wrote (16700)	3/30/2003 1:48:19 PM
From: Paul Senior	Respond to of 78625

Bob Rudd, imo you raise some good points regarding investing in value stocks. So many times value opportunities or traps appear with companies in the throes of problems. Apparently each value investor has to determine for himself/herself how to deal with this. Perhaps "raising the bar" or studying financials to eliminate potential catastrophes is one way. Or (and) if after purchase, heightened awareness and a quick exit if there's an appearance of red flags (massive insider selling, unexpected accounting issues or questions regarding management, etc.). The thread has severeal times talked about the pros and cons of setting sell stop orders 10-20% below purchase price. I need to do some more reflecting in this whole area; some of my assumptions might be faulty. I am willing to accept ownership of a couple of disasters (I seem to have every one that comes along though!) if that means I also purchase similar problematic stocks which rise in values as their companies resolve the issues that had dropped the stock price. I assume that the winners will gain more than the losers lose. That's been hard to see or justify for me in this current market, where so many stocks have come down near lows and seem to be staying there (or dropping further). Paul Senior