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

To: jeffbas who wrote (4237)	6/8/1998 8:47:00 PM
From: Michael Burry	Respond to of 78476

Re: BMC, with a balance sheet $100 million weaker and the income statement only $35 million stronger (on the top, who knows on the on the bottom), to me the market is reacting as if it thinks (1)BMC's management are con artists lying about the company's transisition (2)Asia will last for at least 2-3 years (3) the Orcolite acquisition was neutral at best and probably a negative. Given management's historical record, I gave them the benefit of the doubt, but now that the company is more leveraged, I think the margin of safety disappears. Management was quick to jump in at 17, and it was quick to buy back stock, even borrowing money to do so, in the 16's. Now at 13, it is a contrarian dream but something of a valuation and safety question mark, with debt>equity. Personally, I still buy managment's argument. Looking at the margins on the various segments and management's capital reallocation, it seems to make sense. I think it is falling because of inertia now. I got out when it broke to new lows in the 15's and would love for it to just bottom out somewhere between book and sales. It's high on my list, but I'm willing to wait for some price stability, since I'm happy with my portfolios as they are now. I'm also waiting to talk to the company about some details re: the Orcolite transaction. Mike