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

To: jeffbas who wrote (4051)	5/12/1998 11:43:00 AM
From: Andrew	Read Replies (2) \| Respond to of 78519

"was" means you're done?- Never got to ask you about control/proxy and corporate governance issues. whether the assets were currently being managed to their best use or whether improvements could be made or are being made. too bad.

To: jeffbas who wrote (4051)	5/12/1998 5:51:00 PM
From: Michael Burry	Read Replies (4) \| Respond to of 78519

Re: "historical discounts" for net nets This just does not seem to be relevant. These are not CEFs. A few observations: 1) We are in no way imitating Graham by buying one or two net nets at the top of a bull market. 3 profitable net nets found in the last 2 years of looking doesn't leave much room for diversifying among a basket of them. And the bull pretty much rules out any great businesses being among them. 2) Hence, those of us buying the JBM's and HYDEA's and PSO's are not following Graham, but a separate unproven theory that they will eventually reach net net value. Why am I buying PSO? Because JBM and HYDEA both would have worked out very well. To Graham's criteria, I add: improving balance sheet, a trigger or other new developments, and positive cash flow. This is empirical testing IMO. So far it's working, but I wouldn't say I'd have Graham's backing here. 3) Do we know that historical discounts for net nets are predictive at all? Would it have predicted HYDEA's or JBM's price movements? Not that I can see, but I don't know and I doubt it's been studied. 4) That said, hey, we're all trying to find value in this market, and sometimes its good to just follow rules. Buy a couple profitable net nets at the top of a bull and wait for a 50% gain or 2 years, whichever comes first. This is a theory in testing right now, and we'll never have the numbers to generate generalizability or validity to any conclusions we make. Mike