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

To: E Newman who wrote (2882)	12/29/1997 9:56:00 PM
From: Paul Senior	Read Replies (1) \| Respond to of 78663

E Newman: SFC could very well be undervalued. I looked a while ago and got scared off (that could be a good sign to buy -g-). Too tough for me to figure the risks and safety factor(s). First, it's a small player, and as you know, the big regionals or other banks are sniffing about for this business. Second, I don't understand or like the one-to-four family residence idea. Duplexes and fourplexes are tough to own profitably - in my limited experience - and there are just too many owner walkaways when things get tough. I don't know how this is covered in the loans/selling or purchasing or how it might affect SFC. (Not saying that we're going to have a lot of landlords giving up their places - but rather I lived through it in Texas, and like generals who fight current battles like they fought the previous war, I'm too limited in my thinking to be very positive about multifamily housing like these.) Third, Yahoo says they earn 50% on their equity. NOBODY can keep those margins. NOBODY. Competition or something (maybe they'll run out of things to securitize -g-?)will lower them. When (okay, if)this happens, I figure the stock is a buy at maybe a little down from book value - say $5, down from current $9 price. And finally, I already have enough on my plate with "securitization" - I'm sticking as best I can with GNT. Them's my opinions--Paul