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

To: Paul Senior who wrote (18068)	11/23/2003 4:30:42 PM
From: - with a K	Read Replies (2) \| Respond to of 78777

Any interest in St. Paul (SPC) here? Per Yahoo, some compelling valuations IMO, but haven't studied it yet: Forward PE of 8; PEG of 1.0; Price/Sales of .95; Price/Book of 1.3; profit margin of 10.4%; yield of 3.3%; ROE of 15%; but low ROA and Debt/equity of .57. finance.yahoo.com The chart shows some support at the 200 DMA: finance.yahoo.com St. Paul to Buy Travelers in Stock Deal Monday November 17, 5:06 pm ET By Tom Johnson NEW YORK (Reuters) - St. Paul Cos. (NYSE:SPC - News) on Monday agreed to buy larger rival Travelers Property Casualty Corp. (NYSE:TAPa - News; NYSE:TAPb - News) for $16.4 billion in stock, creating the second largest commercial property insurer in the country. The new company will have an unmatched presence among commercial line insurers in nearly half of all U.S. states and boast more than $100 billion in assets and $15.6 billion in combined premiums. Only American International Group Inc. (NYSE:AIG - News) will be larger. The deal also represents a homecoming of sorts for St. Paul Chairman and CEO Jay Fishman, who once served as Travelers' top executive when it was still a unit of Citigroup Inc. (NYSE:C - News). He has spent the last two years refocusing St. Paul on its core commercial insurance business and bailing out of unprofitable lines like medical malpractice. With the addition of Travelers, St. Paul will nearly double its premiums generated from general and commercial underwriting. St. Paul will retain the corporate headquarters and Fishman will serve as CEO, while Travelers will gain a slight control of the combined company's board and hold the chairman's position for the next two years. "We're taking this opportunity to create really an extraordinary company which exceeds the opportunities we'd have on our own," Fishman said in a conference call with analysts and investors. "I can't think of any company that brings the breadth of products of these two companies. The combined company would instantly become the leading provider of commercial insurance lines in 22 states and a top three provider in 43. The deal essentially combines Traveler's strength in underwriting small- to mid-sized general commercial companies with St. Paul's concentration in specialty lines used by construction and oil and gasoline firms. "Basically, what they are doing here is ... giving Jay Fishman and his team a bigger, more dynamic vehicle to play with in the property and casualty arena and doing it on a cost- efficient basis," said Michael Lewis, a UBS analyst.

To: Paul Senior who wrote (18068)	11/23/2003 8:34:03 PM
From: Dale Baker	Respond to of 78777

Their results are impressive. Worth noting, however, that they have a team of people for the 375 stocks they actually own and the 1100 they follow. I agree 100% with their general approach - not dissecting companies down to the last molecule to decide if they are worth holding. Number crunching seems to take on a life of its own. SM: You have 375 companies in the Al Frank fund. Is it difficult to keep track of them all? JB: No. We have three people who do research. We follow 1,100 companies in total. I used to follow 900 companies, and it was just me. It's not that difficult when you're doing the kind of research that we do. It's not rocket science. So many people think you need to publish a 50 page research document and visit the company and talk to suppliers and customers and all that stuff. We don't do that. We don't need to. Those who actually do those things don't perform as well as we do. If you take a view from afar and you don't get too close to the situation, you can eliminate a lot of the emotion from the equation and focus on the numbers. Our approach is based on what has worked historically for equity investors, and that's buying undervalued stocks trading at low P/E ratios, low price/sales ratios and low price/book-value ratios. It's not as if we've discovered the magic formula and nobody else knows about it. We have the patience and discipline to implement the strategy. The majority of value investors don't.

To: Paul Senior who wrote (18068)	11/25/2003 10:06:05 PM
From: Grommit	Respond to of 78777

Paul -- Thanks for posting the link. It is reassuring to have someone with a good track record agree with a less rigorous financial analysis methodology. I have around 80 stocks (35 stocks and the rest REITs and preferred) and know that I have too many to follow very closely. I also look at key ratios and historical earnings trends and company outlooks without much critical review on my part. I just try to pick cheap stocks that won't collapse with an economic dip. Stocks that make something to sell or sell something tangible. to "- with a K": I've looked more at BEL and am comfortable with my quick-buy holdings. And I may add a bit more also. The company sent me copies of all the analyst reports and it was more than I could handle. One report was 35 pages but mercifully, only 10% numbers. They had three financial pro formas base case, downside and best case. In US dollars -- base is $1.87 in 2005, best case is $5.12 in 2007. Other analysts had the same in 2005 ($1.75 or so) so I think the company is leading and helping them closely. I think there may be some upside to the 2005 numbers based on the tone of the latest earnings announcement and the solid backlog. I agree with the analyst who writes "the market opportunities are enormous, while barriers to entry are huge..." This weighty analysis pkg I rec'd in the mail on BEL relates to the link by Paul, describing mind numbing analysis as overkill. (And I've been burned relying on anaylsts, company IR departments, and even CFOs in the past (who told me one thing on the phone and had a press release the next day describing otherwise). No one knows what will happen and some people lie or are deceived.) So an investor really needs to do his own analysis, but, is it really worth the effort?... grommit