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

To: Spekulatius who wrote (18833)	3/9/2004 9:58:59 PM
From: Spekulatius	Read Replies (3) \| Respond to of 78515

Portfolio update - BDK I hate buying near tops but I don't see much reason for the stock to go down. The toolmaker had good results recently and sports a low valuation, IMO: + PE around 12.5 + Strong FCF + 5 stars per S&P + beat estimates the last 4 quarters + strong market position - acquisitions - Long term growth rates small - goodwill My investment thesis is that this is a company that is operating well and the valuation has not caught up with the fundamentals. I have followed BDK for a long time here and then and the results were always very unpredictable. My hope is that the management finally has figured it out and will provide consistent results as it has during the last 2 years, which would make the current valuation appear like a bargain.

To: Spekulatius who wrote (18833)	4/20/2004 11:47:43 PM
From: Spekulatius	Respond to of 78515

Sold remainder of my TSU position, bought TMB. Switched to TMB since TSU has been strong while TMB has been weak. TMB also has a strong balance sheet, and generates stron FCF. It is one of the few independent local operators (TCN is another one) with one of the highest market shares (58%). From Q4 2002 to Q4 2003, TMB had a FCF of about 300M Real, equivalent to roughly 100M$. Based on roughly 600M$ market cap, this is a FCF yield of 16.7%!. Currently, the company is investing very little, obviously but the migration to GSM is imminent about 350M Real need to be invested in the Network. I don't think it will be a problem for TMB to do this. I think the shares have been under pressure because TMB decided to accelerate the depreciation of the existing network from 12%/year to 25%/year due to the migration to GSM, which affects net profit but not cash flow. I think this will be temporary as the network will be depreciated in a very short time and since I tend to value FCF more so than net earnings, I consider this not that much of an issue. All in all, this seems to be a good bet on its own, even without the takeover appeal. I plan to add to my position , if the stock goes down some more.