To: Bryan Steffen who wrote (1630 ) 8/29/1998 3:31:00 AM From: michael r potter Read Replies (1) | Respond to
A difficult week and month for all. Time to take a deep breath, think logically, and remove emotions as much as possible. The current NAV buys CATP @ $36, TLAB @ $49, CMPC @ $4.50, $18.75 for SCAI, $22 5/8 for DTPI, a bunch of small ones for under $5.00 and a valuable interest in private companies for the $1.25 premium. Partnership companies are mostly in exciting and high growth areas of the economy for years to come. These prices are once again bargains if one looks at their estimated '99 earnings [we're almost there] compared to their growth rates and what these companies will be in two or three years. For example, TLAB is expected to earn $2.36 /sh. in '99 [maybe $.15 less for Cienna dillution]. It is only selling at a 22x '99 with a long term growth rate of probably 25%. That is an earnings yield of 4 1/2%. The CEO owns 10% and will be working very hard to get the stock price back up. Officers of SFE own 16% of SFE and are keenly aware of the decline. They are all highly skilled, experienced, and motivated. I have seen periods when prices were a lot cheaper compared to growth rates, but interest rates and inflation were way higher than now. [by the way, when a smaller SFE bottomed at $17 and change in early '97, the long bond was close to 7%] Looking at SFE from a different perspective, SFE went from $3.00 to $46.00 in three years ['93-'96]. It has spent two years digesting those gains in a trading range which is normal. A buying opportunity is being created for the next leg up. On a very short term basis, this market is setting up for a sharp snapback, probably starting Monday. One last thought. Hope you have all kept more powder dry than I. In November, tax loss selling will be spirited this year with bargains aplenty. Hope you do well. Mike
