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

To: TimbaBear who wrote (17471)	7/30/2003 7:03:24 PM
From: David	Read Replies (2) \| Respond to of 78982

Timba: Great news on EBSC. I am still holding and hoping for higher bids. It sure took a long time for the market to recognize any reasonable value for EBSC. I believe a price for the company should be 20% to 50% north of $7.00, and perhaps more. That would provide the purchaser somewhat of a bargain price for the company, which they probably deserve given the company's past poor performance over the years, and provide patient shareholders like ourselves a fair exit price. I remember Snyder, the largest shareholder, paid over $9.00 per share for a lot of its holdings. It seems a value over $9.00 could be justified if Snyder paid that price for a "value investment." I do think the company's financial results after it emerged from bankruptcy were veiled by one special charge after another. Despite the accounting charges and extraordinary items, EBSC's cash flow and balance sheet remained fairly consistent and strong and could be very valuable to a perspective purchaser. I purchased more shares after the first announcement of interested bidders a few months ago at $4.50 per share. I call that my arbitrage position. The arb scenario you point out in your post seems interesting as well, but I have difficulty getting over the fact that I could have made purchases of this company several weeks (days) ago at much lower levels (stupid emotional rationale). I might take a shot on acquiring more shares if the spread remains and things firm up a bit. I would like to be more certain on the downside risk, although over the long haul (before department stores completely lose their flavor) I believe the market will recognize EBSC's true value even if things fall completely apart. I also think $7.00 per share serves only as a floor on what Bon Ton might ultimately pay for the company. On another note, its interesting to see PPM selling huge amounts of its shares prior to the Bon Ton announcement. So much for inside knowledge amongst "institutional" holders and the "I wonder if they know something I don't know," mentality. I would say both PPM and I are pretty clueless. I would love to hear your thoughts on an arbitrage at current levels, etc.