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

To: jeffbas who wrote (4064)	5/12/1998 9:27:00 PM
From: Michael Burry	Read Replies (2) \| Respond to of 78520

But have you persuaded me that historical discount to net net means anything? No. On a practical level, should it mean anything? We're talking about illiquid profitable stocks that are net nets for lack of publicity, high insider holdings/low float, crappy industry, poor management rep, or just plain ignorance on the Street. Obviously, Wall Street can be pretty sudden about its decisions when it does recognize one - both JBM and Hyde have had 40% moves over a few days. If ignorance is the issue, then why should historical discount mean anything? I think historical discount makes sense if you feel the market is efficient in the stock. I obviously don't feel that way about any of the net nets I've proposed. Hyde had a historical discount for just about ever - Al Frank pointed this out in 1987. My rule involves buying net nets at a discount in this kind of market, and waiting 2 years or for 50%, whichever comes first. I added some other criteria, and now I'll see how my particular version of Graham's classic cheap stock screen does. So far, it's working, but that's not to say it will or won't continue. With any net net, I expect poor earnings comparisons. I expected them when I brought up Hyde here, and I expected them when I brought up JBM on MSN. Nothing in my conversation with JBM's CFO indicated earnings would improve, but that was irrelevant to my focus - were the assets good, and were the inventories moveable. In this market, as James says, if a net net doesn't look like it sucks, then look deeper. Mike