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

To: E_K_S who wrote (29210)	12/11/2007 1:25:29 PM
From: E_K_S	Read Replies (1) \| Respond to of 79291

Re-established my WON position (after 31 days) and doubled my share holding. This is my speculative pick for next year. The stock is trading near its all time low and the only thing it has going for it is the company continues to generate positive free flow cash almost $1.00/share. The company has been experiencing negative growth which I believe is at or near its end in their spiral down. That's my bet...the growth rate decline is over and revenues at current levels stabilize. Expectations are still quite negative which allows the value investor to pick up shares at a discount. The company sells below book value, continues to make capitalized investments in their network (in Dec, 2007 have updated their network with new digital equipment), signed a new distribution contract with Citadel broadcasting and even reported a profit in its last quarter (Westwood One 3Q Profit Tops Analyst View biz.yahoo.com ) The company wrote off $5/share goodwill in January 2007 and has accumulated a tax loss carry forward from their annual losses to-date. Be warned that the company does carry a large amount of revolving debt which is serviced from their current cash flows. My new fair value price target is $6-$8 per share which is based on the current price media companies sell for based on their free flow cash (6x-8x $1.00 share TFCF). The one bogey is CBS has a standstill agreement that expires Dec 31, 2007 to not sell their 16 million shares (almost 20% ownership of the company). After that date, these shares probably go on sale. It's an interesting value proposition but this company is not without risk. Based on the current price, my dollar position is small (less than 1% of the portfolio) but represents a lot of low priced shares. EKS Disclaimer: I have been wrong on several picks in the past and this one is no sure thing... so invest only what you can afford to lose. ========================================================== Company events: NOVEMBER 26, 2007 Westwood One announced Monday a group deal with Citadel Broadcasting to provide the radio broadcaster’s local station Web sites with online traffic and local news. By Jan. 1, 2008, RealTraffic will debut on 50 Citadel Web sites and MetroWebNews will debut on more than 200 Citadel sites. “This partnership with Citadel represents our largest distribution deal of our key Metro assets with any media entity to date,” said Gary Krantz, chief digital officer for Westwood. “As Citadel aggressively rolls out their digital platform, we are excited to work closely with Citadel Interactive to create compelling local content to their growing list of radio station Web sites.” New Equipment Purchase Reported December 5, 2007 (A major order from CBS Westwood One - the largest radio network in the US - to modernize its entire network with the Superflex Pro Audio suite of products and Datacast XD Content Management and Distribution System. The upgrade and expansion to more than 2,000 sites provides the ability to regionalize content during national broadcasts. The upgrade provides cost savings and improved audio quality for the listener and also consolidates various services into a streamlined network delivering content to 5,000 terrestrial sites.

To: E_K_S who wrote (29210)	12/11/2007 6:28:36 PM
From: Paul Senior	Read Replies (1) \| Respond to of 79291

re: "Interesting read on Valuing Companies using Free Cash Flow" Written 15 April 2007: "At any rate, at 22x current and 19x times potential TFCF, Intel’s stock isn't likely to reward investors with large gains in a year or less, but it should provide a decent margin of safety (downside risk of below 20%, even in a bad market)." I'm satisfied with INTC which I bought in '06. Still holding my shares, as are you EKS, I imagine. I bought on p/e about which they say, "The investing media remains antiquated and basic, focusing almost solely on the often misleading earnings per share P/E ratio, even though free cash flow is the only true lifeblood of any company." Oh well. ---- I'm buying a little DIS again today based on forward p/e. Here are guys though who like it as a buy for cash flow: marketwatch.com{B2FBD367-BE69-4816-A00D-18BEB304A5AD}&siteid=nbc

To: E_K_S who wrote (29210)	12/12/2007 4:21:00 PM
From: Jurgis Bekepuris	Respond to of 79291

IMHO, from looking at these two companies from Buffettology point of view, neither stock is a bargain though CSCO is closer to being one. I am not sure INTC is a great growth company that it was anymore. Although it still remains one powerhouse in processor business, so it's stock will fluctuate wildly as profitability varies depending on capex, sales and price pressures. INTCs ROE is varying all over the place in the last 5 years, and unfortunately I believe the trend will continue. CSCO I believe is much more back on the growth track and I really missed it on its rebound and couple drops into teens. Whether FCF is very useful vs. other metrics, I am not sure. Most of the time I think it's splitting hairs where like Buffett says "it's more important to be approximately right than precisely wrong". But I agree that there are - perhaps few? - situations where FCF vs earning difference may make a huge story. I am not sure this is the case for INTC and CSCO.