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Strategies & Market Trends : Mr. Pink's Picks: selected event-driven value investments -- Ignore unavailable to you. Want to Upgrade?

To: Mr. Pink who wrote (3170)	9/20/1998 7:45:00 PM
From: Boom Dog	Read Replies (2) \| Respond to of 18998

Hello, Mr. Pink I would like to thank you for opening this board up to everyone for discussion. I am finding it very useful. I have not participated substantially yet, so this will be my first real post. I had a response to your comment that you would like to see if a Big 5 accounting firm would "bless" REXI's accounting. I have been studying REXI (and the other lenders) for the last few weeks since its dramatic fall begin. It seems to me that even if a Big 5 accounting firm "blessed" REXI's accounting that would be completely irrelevant. Why should we let a bunch of accountants tell us how to value a company? It would not change that only a fraction of REXI's earnings are cash, and the bulk are non-cash items. Wouldn't you say that the careful individual analyst, rather than being swayed by the decrees of a bunch of accountants about GAAP, should value a company based on how much he/she thinks the earning stream, its growth prospects, and the underlying assets are worth? For example, from my calculations, last quarter REXI had about 8 cents of cash earnings, and about 37 cents of non-cash earnings. The 8 cents of cash earnings are in the bank. The 37 cents of non-cash earnings are based on the appraisals of the properties which secure the loan. Obviously, if the properties are worth exactly what REXI paid for the loans, and there is no added value, then the 37 cents of earnings are worthless. If they are worth the full appraised value, and REXI can foreclose and sell them, then the 37 cents would actually understate the earnings. The trick is to decide how much "added value" REXI contributes to a property based on its seizure of the cash flow, restructuring of the underlying business, and sending in its own property managers. One useful thing would be to try to compare the appraised value of some of the properties REXI controls to comparables in the Philadelphia (or other) market. I am starting to look into this. So I guess, in summary, wouldn't you say that to properly value REXI, rather than listening to a bunch of accountants, isn't it more appropriate to do the "accounting" yourself, so that you can decide for yourself what the company is worth? Thanks again! - The Boom Dog

To: Mr. Pink who wrote (3170)	9/20/1998 10:45:00 PM
From: PaperChase	Read Replies (1) \| Respond to of 18998

>> Mr. Pink would like to see if an outside big 5 firm would do the same.<< Mr. Pink. A big 5 firm would probably conclude REXI's accounting is in compliance with GAAP. They are in compliance. The issue is whether REXI allocation for loan losses is appropriate under GAAP's gain on sale of accounting in the current environment. This is a grey area open to interpretation just like under scam bank accounting. And initially, this interpretation tends to be more political in nature. Before Greentree and Arcadia took huge allocations for loan losses, they were all in compliance with GAAP and had their accounting method of gain on sale accounting blessed by auditors. Just like crooked bank accounting, the accounting shennanigans are not exposed by the auditors or the analysts until it becomes too ridiculous to ignore. These gain on sale accounting scam companies can't hide anymore. It is their time to slip into a peaceful coma.