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

To: Michael Burry who wrote (4089)	5/16/1998 1:40:00 PM
From: Paul Senior	Respond to of 78525

re Graham's 2/3 margin of safety with net-net. This would be for the "defensive" investor I believe. For the "enterprising" investor it looks like Graham suggested only "... a diversified group of stocks selling under their net-current-asset value". There is no mention of 2/3. Some examples show purchases at 2/3, but some show at net-net. (These though are of 'prominent' companies (ref. Table 15-2) -- a category of net-nets that disappeared looong ago -g-). I'll take any list of net-nets. I'm going to censor it and make choices regardless of whether the stocks are selling at at 100% or 66% of net-net. Paul

To: Michael Burry who wrote (4089)	5/16/1998 4:19:00 PM
From: Shane M	Respond to of 78525

Mike, Re: Net-Nets You are correct concerning the discount on the net-net. If you are looking for net-nets selling at 2/3 discount there aren't many. You are correct that some of the market cap data is wrong. For example, IDG stood out to me as one of the best companies in the group, but when I looked into it I found that the market cap value was faulty as you mention. I mentioned this concerning IDG in my original post. The data in the database can also be dated (this is particularly true with microcaps as most of these stocks are not updated as rapidly as the larger companies). In my original post I was going to post the discounts to net net, but given the limitations of my data that you point out, I decided not to. I apologize for not expressing my reservations. As you mention, alot of these companies are dogs. I did look into VOX and quickly excluded it from consideration because of the collapse you mention. A case might still be made that it should be worth the current assets less liabilities on it's balance sheet. One thing I might mention here is that a deep net-net discount might not be needed to generate solid returns. In the dataset from 2 years ago the top performers had a net-net discount greater than 85% or higher. Since there seems to be interest in this I will post the data when I have a little more time. Shane

To: Michael Burry who wrote (4089)	5/16/1998 9:19:00 PM
From: valueminded	Respond to of 78525

Michael: Two examples of ugly businesses but what I believe pass for net -nets with a margin of safety are : parl and desi. I had bought and sold my position in parl but may rebuy in again if it drops below $2. Desi, I have established a position it already. Both of these based on my analysis are businesses with blemishes but none the less, I believe they will pass the Graham criteria of net/net. ie. My analysis shows DESI trades at >30% discount to net current assets. Parl, i will have to recheck. I would be interested in your feedback on these. thanks

To: Michael Burry who wrote (4089)	5/17/1998 1:01:00 PM
From: Shane M	Read Replies (2) \| Respond to of 78525

Mike, Here's a more detailed list of the data that I'm working with. Marketguide is the data provider I think. Price data is from April 2. Financial information is as of Q1 where Q1 is the most recent data available in the database. Q1 date is provided in the far right column. net value is shown as curr asset q1 less tot liabilities q1. Two mkt caps are given. One is a calc of Price*avg shares q1. The other is the mkt cap provided as a field in the database. A few discrepancies exist, with IDG and HYDEA being the most notable. Two discounts to net value are shown, each using the different mkt caps. Again, this screen was for companies with positive EPS, with mkt caps over $5mil, and not on the OTC mkt. price Share curr tot mktcap mktcap 2-Apr Avg q1 asset q1 liab_q1 netval calc provide dscnt 1 dscnt 2 perend_q1 ACMM 1.09 6.64 11.2 3.7 7.5 7.26 7.3 0.97 0.97 31-Dec-97 ASFN 7.75 2.32 33 13.9 19.1 17.97 18 0.94 0.94 30-Sep-97 VOX 6.69 20.22 239.5 101.9 137.6 135.23 115.4 0.98 0.84 30-Nov-97 CSTL 2.5 4.48 18.5 6.6 11.9 11.19 11.2 0.94 0.94 26-Sep-97 CHRB 2.06 6.03 50.3 23.8 26.5 12.44 12.4 0.47 0.47 30-Sep-97 CRAN 6.38 1.51 17.2 7.5 9.7 9.64 9.6 0.99 0.99 31-Dec-97 EDIN 2.25 7.07 26.5 9.7 16.8 15.91 15.8 0.95 0.94 30-Sep-97 ESP 15.38 1.11 21.7 1 20.7 17.08 17.1 0.83 0.83 31-Dec-97 HBW 5.75 1.06 8.5 1.7 6.8 6.07 6.1 0.89 0.90 30-Nov-97 HYDEA 4.5 6.26 54.6 16.2 38.4 28.19 12.2 0.73 0.32 03-Oct-97 IDG 18.81 1.39 106.1 41.4 64.7 26.06 136.5 0.4 2.11 30-Sep-97 ISRL 0.56 26.4 19.9 4.3 15.6 14.86 14.9 0.95 0.96 30-Sep-97 JLN 5.13 2.69 24.8 9.4 15.4 13.79 13.9 0.9 0.90 31-Dec-97 MAJ 2.63 7.71 58.6 34.2 24.4 20.23 20.2 0.83 0.83 01-Nov-97 NICH 5.75 1.21 13.5 3 10.5 6.99 6.1 0.67 0.58 30-Nov-97 PLAN 2.63 4.47 18.4 5.9 12.5 11.74 11.7 0.94 0.94 30-Sep-97 OROA 6.5 6.27 60.5 19.2 41.3 40.76 40.7 0.99 0.99 31-Oct-97 PSO 6.25 1.39 12.3 1.9 10.4 8.7 8.6 0.84 0.83 28-Nov-97 QSYS 4.56 4.33 48.2 24.2 24 19.77 19.9 0.82 0.83 31-Dec-97 RAGS 2.88 4.56 29.5 12.8 16.7 13.1 13 0.78 0.78 29-Nov-97 RGFX 1.94 10.13 38.7 14.4 24.3 19.64 18.5 0.81 0.76 30-Sep-97 SCCO 6.25 2.74 53.9 32.7 21.2 17.11 18.2 0.81 0.86 31-Dec-97 TAIT 2.88 6.66 42.2 20.7 21.5 19.14 18.8 0.89 0.87 30-Sep-97