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

To: Paul Senior who wrote (5101)	10/7/1998 1:01:00 AM
From: Shane M	Read Replies (1) \| Respond to of 78845

Paul, Wow, it's a bloodbath out there. Worst that I can remember. (But my memory isn't that good -g-.) Not too many posts here either. Yep, Enthusiasm wanes when you're down 30+% in only a few months. I've been tempted to try a short like you mention, but I've never done one and besides shorting the stocks I've been buying I haven't the slightest clue what kind of companies would be best to short. I lightened up on my position in DSWLF today. Japan is looking like it's going to blow up in our faces. Saw a NY Times article that Japan banks are in worse shape than we thought. It is amazing to me that they can have all that capital, a highly educated and loyal workforce, and can still not make the economy work. Fundamentally, I've become a short term bear on this market and am looking to raise a little more cash should we get another rally, but I'm looking to jump back in with both feet into small caps when it seems market sentiment turns. Psychologically the current trend is extremely draining and I just don't feel like fighting it anymore. I'm at the point where I expect my holding to decrease in value each day, and am surprised when the market makes a move up. I guess that makes me a bear, huh? Does anyone have comments on Danka Business Systems, DANKY? marketguide.com wsrn.com Reason for recent drop: They continue to have problems with the Kodak acquisition, and per a recent press release are likely going to violate some of their loan agreements and post loss this quarter. Revenues are down. On plus side: recently brought in well regarded new manager to turn things around. Sales force seems to have been really torn up by the merger w/ Kodak. Lots of turnover in sales force. Per some reading at Yahoo where some employees post, it seems the attitude at the company has changed to be more positive . Sales of around $3.3 bil, and market cap of $195 mil. If they can turn it around this stock should be able to earn over $1/share if it returns to a 2% margin, which is doable by historical standards. Currently selling at around 0.40 of book, and around 0.06 of sales. I'm not buying yet given my newfound bearish outlook, but this is way up there on my list of interesting possibilities. Then again with my recent history maybe I should short this one <g> Shane

To: Paul Senior who wrote (5101)	10/7/1998 11:33:00 PM
From: James Clarke	Read Replies (2) \| Respond to of 78845

Yeah, its a bloodbath. Today the knives came down on financial stocks. Tomorrow, who knows? But the trend is pretty clear right now. This idiotic notion that we are not in a bear market until the Dow drops 20% has been laughable for two months now. The knives came down on Dell today, but that's just the start. LaSalle Hotels - I pitched this idea a couple times on this thread, and am embarrassed to say that. I only hoped today when the bottom fell out that I was the only one who bought it. (When I liquidated my portfolio in July I held onto only 5 stocks. Why this one??? $%!) But unfortunately, that's not so. I have never lost big money on a real estate stock until this one. All I can say is this. I talked to the CEO today. He bought shares at 12 - he's not a bad guy, I find him completely trustworthy. The stock is not going down because of anything the company has done. So far the company has done nothing wrong - they are just in the worst place at the worst time. Their hotels are worth $16-20 a share by my estimate. They pay a dividend which now yields 17%. 17%! Could it get cut? Sure. Are we at all certain it is going to get cut tomorrow? No. Their earnings are not falling, and they are not seeing the warning signs they are looking for. Will they if we go into a recession? Yes. The stock is in a panic sell. I am a buyer, not a seller. This is one of those real tests for a value investor in a bear market. I have not been through one of these before like Paul. But when I saw the stock at 8 1/2 this afternoon, I felt like I had been punched in the stomach. I told my boss about how I felt, and he told me that is the best buy signal you are ever going to get, though it is the most difficult buy signal to act on. He was absolutely right - the stock closed 10% up from that level, and I never pulled the trigger. PMA is another one you want to get to know. So is BT. Both have major problems (PMA's became known today, BT's are still unknown, which may be even worse. But you can get the same yield on Bankers Trust as you get from RJ Reynolds Tobacco. Are derivatives carcinogenic?) For Buffett type value investors, take a long look at Ambac (ABK), one of my core holdings which may be about to get annihilated. Ambac's earnings are absolutely untouchable for three years - you've got to know accounting to appreciate this beauty. I haven't been posting much lately. Part shellshock, part busy, part - I'm just not interested in buying anything until the market indices are at least close to what I think they are worth. I posted this near the peak. Dow 6000, S&P 650. There are clearly a lot of cheap stocks out there, many very cheap. But they are going to get cheaper until Dell goes to 30, GE goes to 40-50 and MSFT goes to 60-75. This market is fighting and fighting, but it breaks a little more each day - today the Dow looked OK, but the carnage in individual names was one of the worst days I have ever seen. And its still early October. The best is yet to come. JJC

To: Paul Senior who wrote (5101)	10/8/1998 9:41:00 AM
From: Daniel Chisholm	Read Replies (1) \| Respond to of 78845

Paul, you mention buying some more Conseco (CNC). What do you know about the sell(short?) recommendation that Ray Dirks had on them about six months ago? It's gone now, apparently Conseco and Dirks came to some sort of understanding. But I recall he was alleging that there was very serious accounting shenanigans going on. I found his detailed description to be very difficult to follow because even though I find the insurance industry interesting, I must admit that I understand it very poorly, and its accounting even less so. - Daniel