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

To: jeffbas who wrote (2690)	12/6/1997 7:14:00 PM
From: Michael Burry	Respond to of 78566

Jeffrey, re: OXHP <<I am telling the folks on this thread that if you lose control of the data you have a real problem. >> Yes, but we already know they had a real problem to the tune of >$90M hit to the balance sheet. Rather than a rate increase, Oxford charged it off the balance sheet. Check with Oxford - their rates are still among the most reasonable in the area, and they have no plans to increase rates to make up the AR charge or the AP charge. They've just swallowed it, however painful. This contrasts directlly with, say Aetna's attempts to force contracts of adhesion on its doctors. When many doctors have a real problem with a plan, the AMA knows about it, and hence I should know about it. The Oxford mess was not a big issue at the AMA as far as I know. Just from the physician feedback I've received, Oxford seems to have had a better reputation than most of being attuned to doctor's needs than most. In the last year this has been tainted by the claims delays, but in general physicians have found Oxford to be understanding and innovative in their plans. And they did advance up to $270 million as an open checkbook to try to keep physicians happy, which most others would not have done. This drastically reduced the anger providers would otherwise have felt. Most importantly, the patients have been extremely happy with Oxford. Management, with its Freedom Plan which allows choice, its Alternative Health rider which allows coverage of acupuncture and the like and helped it win contracts with big "alternative health"-employee-rich employers like Donna Karan, and its specialty management services which is the first plan to directly distribute some power to specialist groups; all of these have established that management is innovative and competent. Oxford is also moving ahead with its Florida expansion. Many had thought that they would delay this, but their position is that they have their IS problems under control and they are now financially strong, so there is no reason to not expand as planned. This will introduce their excellent management and innovative plans into another market which does not any claims bias. Once again, I'll disagree and say that in the low-mid20's OXHP has most of its problems discounted, with possible over- allotment of reserves for claims, conservative AR numbers, a strong balance sheet, and the likelihood of mediocre but very positive earnings >$1 share next year, going up from there. I see $6 billion in revenues next year on sale for less than one third that now. The risks are further disclosures by management, which would be truly criminal, and Clinton, who recently recommended further federal oversight of HMO's. Good Investing, Mike

To: jeffbas who wrote (2690)	12/9/1997 7:50:00 PM
From: jeffbas	Respond to of 78566

I guess "Oxford is really not different" (my post #2690). After the latest charge, retained earnings are approaching zero. This means that in their core market they have, in effect, not made money. In fact, losses have been characteristic of the difficult NY/NJ HMO market for years. Note also what I have posted over on the Oxford thread regarding their growth prospects. I have seen time and time again in the group health business companies who charged too low rates and set up too little reserves. They are able to grow the business to quite remarkable sizes with good (phony) financial results before the music stops. At this point, because of the comment in the first paragraph above, I would not consider OXHP (after tomorrow's drop) a value stock. I still recommend avoiding it, except possibly for a trading rally - if it has a large short position and drops a lot tomorrow.

To: jeffbas who wrote (2690)	12/9/1997 8:22:00 PM
From: Thomas Haegin	Read Replies (2) \| Respond to of 78566

Re: On avoiding OXHP Jeff, thanks for letting me know about your 2 posts. It looks rather grim. I still don't know what to do. But I will go to bed now anyway and sleep it over. Do you see Chapter 11 as a possibility at this point as the chap over at OXHP board suggested? Do we have historical examples for this case? You have so long an experience, can you remember any similar case? For me it's all about management. Actually I think they maybe should put themselves on the block. Thomas This is a very interesting thread I occasionally read, but didn't post on yet. So Hi everyone!