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

To: James Clarke who wrote (4468)	7/23/1998 10:02:00 PM
From: Michael Burry	Read Replies (2) \| Respond to of 78717

Re: USU Ok, here goes - To be misunderstood, there must be hidden assets. Are there? First let's value inventories correctly (I admit that valuing much of it at DOE's cost is not an accurate reflection of the value): In stock on books at DOE cost: 7.944M SWU @$90/SWU --> $715M 12,145 Metric Tons Uranium @35/kg --> $425M Just got from DOE for free, on books at DOE cost: 7000 metric tons uranium --> $245M 3800 metric tons uranium --> $133M Just got from DOE for free, on books at estimated current value given that this is raw material that must be broken down into Uranium and SWU: 45 tons LEU --> $25.3M 0.8 tons HEU --> $22.4M 50 metric tons HEU --> $176.8M Other assets include cash of $50M, AR of $222.5M, Russian product paid for but not delivered $162M, property of $121.6M (I'll assume that's true), and several other assets that add up to about $600M There's also a big "other" at $574M which I'll throw in as true. So that's $2920M in assets Assuming liabilities are real, there's 980M in current accounts, $150M long term, and 127 other for about $1.25B. That gives me $1670M in adjusted book, which is at the high end of the projected IPO price. No dollar for 50 cents as far as I can tell, but yeah, it's a dollar of real book for about 85 cents, assuming that the present value of future dispositions is a wash. For 85 cents of book, I get a 7.7% dividend, first paid 12/31/98. I also get about $200M in reproducible free cash flow. And I get a product mix that is increasingly leaning on Russin HEU, which as far I can tell there buying for about $85/SWU and selling for about $90/SWU. I'm doing this as I'm late for dinner with the inlaws, so that may require rechecking. That lower margin business is now at 37%, up from 25% of business. And SWU prices have ranged from $49 to $91 in the last ten years, making the increased reliance on Russian HEU more risky, IMO. It dominates the Asian market to the tune of 68%, which I see as a great opportunity for the company, as more than anybody Asia once it gets going again will need what the company sells. And it's laser enrichment technology is exciting, but would be more exciting if it was being deployed sooner than 2005. The competitors already have cheaper processes, and one of them will be getting an even cheaper process around 2001. The company competes primarily on price. I see a decent value play, but I think the government is getting close to fair value, give or take a few hundred million ;) Good Investing, Mike

To: James Clarke who wrote (4468)	7/24/1998 2:07:00 AM
From: Proton	Respond to of 78717

Re: "Lighten up, Frances" USEC is not a utility. You may want to look up "facetious" in the dictionary and spare the thread just a small portion of your earnestness. I would have been more impressed if you had answered my query regarding the labor situation, especially since you "know the business as well as anybody." You have given us a provocative analysis of the stock, and you may have turned our attention to a winner. Don't ruin it with twentysomething condescension. Pý p.s. The "Re" line on this message is a quote from a favorite movie of mine, so try not to get too exercised over it (anyone know what the movie is?). p.s. [on the edit] I noticed your deigned to mentioned unions "as a possible obstacle" to Mike. Thanks, but I watched (and profited from) WHX during its agonizing attempt to get union concessions on head count and work rules. You'll have to do better than a golden assertion of "low-hanging fruit" to convince me on this point.