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

To: James Clarke who wrote (4710)	8/19/1998 10:52:00 PM
From: BGraham	Read Replies (2) \| Respond to of 78621

TO: James Clarke & Paul Senior re: N Paul ; I just threw in the bv bit as a point of beginning, I'm sure what you say is correct ... " i'm not sure that high book value relative to current price is the key" . I can't help but wonder if N doesn't meet the Graham concept of buying " unpopular large companies" or " the purchase of bargain issues" as laid out in the Intelligent Investor 4th revised edition( pages 80 - 85. Graham warns though that neither currently disappointing results nor protracted neglect or unpopularity if considered alone can be relied upon as a guide to a successful common stock investment. He gives examples of similar situations that turned out poorly... ie Anaconda Wire and Cable (circa 1956). He suggests that if this type of company is being considered ( for investment) then the investor should require an indication of at least reasonable stability of earnings over the past decade (ie no year of earnings deficit)and that the company be of sufficient size and financial strength to meet possible setbacks in the future. The ideal combination according to Graham is an enterprise that is large and prominent and selling both well below its past average price and its past average price/earnings multiplier. I think N fits the bill in the majority of these conditions. James: Your comments would seem to suggest that historical earnings are of little significance in this situation. If you accept the premise that the long run equilibrium price for Nickel is about $3.00 per pound and with Inco slashing and burning and showing a relatively small loss at current nickel prices, would you not expect a return to profitability in the medium ( perhaps 2 - 5 years) term?