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Gold/Mining/Energy : GPW Group West Systems Ltd. (Year 2000 Software Company) -- Ignore unavailable to you. Want to Upgrade?

To: RBMac who wrote (644)	5/7/1998 10:11:00 PM
From: Mr. Forthright	Read Replies (1) \| Respond to of 1443

RB thanks for your informative post. Here's my answer. Hopefully you will think that I am being constructive. <<1. GPW value is based on future sales and earnings.>> I agree. The market always looks at what is ahead. My point is that the past, if indicative of anything, proves that the management of this company is either incapable of growth or does not desire growth. With a $41 million market cap I would think that the investors are betting that the management will deliver great results through their acquisition strategy, which is, in itself, quite a difficult task. I do not believe that the investors think the existing business will, on it own, grow that much this year. <<2. There is a big market place for Year 2000 conversions.>> I agree. <<3. There is likely to be fallout from non-compliant companies post 2000, thus there is a market there.>> I agree. <<4. The company is not only Year 2000.>> I agree. <<5. The company is attempting further diversification.>> So they say. Although this may be a great strategy, especially if they can buy companies with their greatly inflated paper, it could work beautifully. But as I have written before making strategic acquisitions and successfully integrating them is an art. The jury's out on this one. <<6. The company is growing contract handling capacity through acquisition. This will allow for a bigger market share, higher sales, and if efficiencies are maintained or increased, increased earnings per share.>> I agree, if they can pull it off. <<If you are looking for closer pictures of 'value' look towards Banks and other Blue Chips.>> The whole market is looking expensive. When I speak about value I do not mean that I don't believe in high P/E ratios. High P/E ratios can be indicative of several things: fast growth, inflated stock price, etc. The high ratios on GPW are more indicative of a small float then high growth, there hasn't been any to date. <<If the company can't show consistent growth in sales then, yeah, she'll tank. But even if there are dips in smaller than expected growth the long wave will rise. Anyways, nothing is for certain.>> I agree with most of that. <<I was suppose to ignore you. Must be the hockey that is distracting me.>> Your post tells me that we think alike in some respect. Where we differ, I think, is in the chance of success of GPW's strategy. I believe it is quite low, and you seem to suggest that it is quite high. I am talking about long-term results here. Yes GPW may announce some contracts or acquisitions, and yes the stock may go up in the short term thanks to excitement and a small float. At that point you will probably sale your stock at a profit and this debate will have been irrelevant in your eyes. I look beyond the next announcement and say that in the long-term GPW will have a hard time creating significant sustainable value. I hope our fellow investors enjoyed the last two posts. Cheers