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

To: Brinks who wrote (17365)	7/6/2003 12:32:34 AM
From: 249443	Respond to of 79177

wow.

To: Brinks who wrote (17365)	7/6/2003 10:23:30 PM
From: David	Read Replies (1) \| Respond to of 79177

Now you've got me kicking myself! Wow. Nice run on DXT. I looked into that one after you mentioned it sometime ago but somehow got distracted and never came back to it. I should have picked up a few shares -- should've, could've would've. Thanks for reporting back to us on your great success and congratulations on DXT.

To: Brinks who wrote (17365)	7/7/2003 12:49:16 AM
From: Paul Senior	Respond to of 79177

Nice move in your DXT, Brinks. Can't argue with your results, but I can challenge some of your comments. After June '02, DXT stopped being a "classic" Ben Graham net-net: biz.yahoo.com (64.4-59.2)/3.2 = $1.65/sh 1.65 x 2/3 = $1.1 = max. buy price Sept. 02 quarter. By Mar. '03, 2/3 of net current assets = .94 cents. This doesn't include capital lease obligations that were extant when you posted and which I assume still exist at some level. I believe Dr. Graham would've subtracted these to get to an even lower n.c.a. value. I wonder what Dr. Graham would've done had had he purchased the stock at $1.50 and saw the margin of safety (2/3 of net current assets figure) diminishing. Maybe he would've held, maybe he would've sold. Summarizing again some previous discussions here: as far as I can tell, Dr. Graham never explicitly stated his net current asset plays HAD to be profitable. But in every example that that he used (i.e. in the Intelligent Investor) they WERE ALL profitable companies. Profitability was there for DXT in June '02, according to Yahoo, but not in any of the three subsequent quarters. It looks to me like DXT was unprofitable overall in '02. biz.yahoo.com I don't argue that DXT was, or even still might be, an undervalued company. But as far as being a "Graham CLASSIC" (Ref. your original 8/02 post, "Here is a classic Benjamin Graham "Net-Net" stock"), I'm not so sure. And if I infer correctly from your posts, the primary impetus for buying was that DXT was an obvious net-net and that its being a net-net provided much of that margin of safety. There are a lot of people on the thread that won't buy microcaps or won't buy net-nets. OTOH, there are a group of people here who will, and who are looking for just such opportunities as part of their investing approach. I don't read a murmuring of "glad I bought" here from this latter group, which I interpret to mean not many people, if any, bought DXT when you posted on it. If that's so, then to say, "The margin of safety on this was superb if one did there DD and understood GAAP", implies that the people here who're looking for such opportunities didn't or don't do DD or don't do it correctly, and/or don't understand GAAP. That may be, but another possibility is that those who were looking and didn't buy, do understand GAAP and did do their DD correctly but concluded the margin of safety was not there for them. Based on subsequent business performance, that group was right. Based on subsequent stock performance you were right in your decision to buy. Such is the market. jmo. Others may differ. Congrats again. Whether smart, lucky, skillful, or all of it, it's always good to see patience rewarded for the value investor. Paul Senior