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

To: Jurgis Bekepuris who wrote (29097)	11/28/2007 5:50:02 PM
From: Jurgis Bekepuris	Respond to of 78748

CWCO. This one is somewhat easier to evaluate than PICO. Pretty normal balance sheet, normal operations. The problem though is that the company is earning pretty low ROE. And this does not seem to be changing. Also the growth has been big in 2005-to-2006, but that was the only year big growth occurred. This year Q2Q growth is pretty non-existent. Returns are still low too, while P/E and P/S are pretty high both in absolute and in historical terms. So even if I want to like this company, I think buying right now would be totally macro buy on the water problem/future, so I will skip. PICO. I looked at it again. And I really don't want to dig into this company... The sales and earnings are irregular. You really have to look into its land and water holdings and assign prices onto them. It might have been an easy buy when Clyde bought it at $150M market cap. Now it is at $740M market cap, which changes things dramatically. On one hand, PICO has increased net tangible assets (= equity) by 30% since 2006 with similar increases in 2006 and 2005. On the other hand, most of the gain comes from selling its own stock at 2.6M shares per year. The company is doing yet another stock placement that seems to indicate that the management does not consider its own stock undervalued. I wonder if they are planning to rebuy the Arizona or Nevada land that they sold to developers at much lower prices than what they received for it. :) To finish this rant, I think that PICO might be a value, but it is a very unconventional company and I am not sure I want to be in it, since I am not sure its management is shareholder friendly at all.