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

To: RockyBalboa who wrote (3839)	10/8/1998 10:01:00 PM
From: Mr. Pink	Read Replies (3) \| Respond to of 18998

It is a large short position and definitely a T3/F... Overvalued and the chance of them finding a buyer is nill. Mr. Pink

To: RockyBalboa who wrote (3839)	10/10/1998 7:55:00 PM
From: Big Dog	Read Replies (1) \| Respond to of 18998

Found this analysis (1/15/98) in the Motley Fool (AOL): AgriBioTech develops, processes, packages, and distributes forage and cool season turfgrass seeds. According to AgriBioTech's analysis of U.S. Department of Agriculture (USDA) statistics, the total market for forage and turfgrass seeds that it serves was approximately $1.1 billion in 1996, equally divided between the two product lines. In contrast, in 1996 sales of corn seeds were $1.3 billion, sales of soybean seeds were $700 million, sales of commercial vegetable seeds were $400 million, and sales of home garden vegetable seeds were $300 million. Despite the higher profile of vegetables and soybeans, both forage and turfgrass are markets of the same size. Forage seeds get their name from the fact that herbivores like cattle and sheep forage for the grass that they eat. According to the USDA, 61 million acres of forage crops were harvested in 1996, generating hay revenues of $12 billion -- not a bad mark-up considering the seed materials only cost $550 million. Forage sales are driven by consumer demand for milk and meat. Turfgrass, on the other hand, is the stuff that makes up your lawn. Turfgrass demand has grown at a 6% to 9% rate per year from 1987 to 1997 due to a number of factors, including a strong home-building environment, the increased popularity of turf-intensive leisure activities like golf, and the increasing infatuation among home-owners to have a lush, green lawn. AgriBioTech is all about consolidating the forage and turfgrass seed industry, integrating any units it acquires into a machine-like distribution system that cuts overhead and maximizes sales. The company has also used its acquisitions to build a comprehensive inventory of elite forage and turfgrass germplasm (i.e. chromosomes and genes), meaning that in the future the company will probably become the partner of choice for any agricultural concern looking to penetrate these markets. FINANCIAL FACTS Income Statement* 12-month sales: $133.1 million 12-month income: ($1.13 million) 12-month EPS: ($0.09) Profit Margin: N/A Market Cap: $518.3 million (*Pro forma) Balance Sheet Cash: $1.8 million Current Assets: $54.9 million Current Liabilities: $41.9 million Long-term Debt: $6.5 million Ratios Price-to-earnings: N/A Price-to-sales: 3.9 HOW COULD YOU HAVE FOUND THIS DOUBLE? The rapidly expanding revenue stream as the company successfully executed a "gobble-to-grow" strategy in the fragmented forage and turfgrass seed market is really what should have caught investor attention. Any company growing revenues 400% to 500% year-over-year has potential -- particularly when it is focusing on a viable niche that has been ignored by the big names in its respective industry. In this case, the fact that Pioneer Hi-Bred, DEKALB Genetics, and Novartis AG were all not paying attention to the forage and turfgrass seed market created an opportunity here. Whatever opportunity was here, management created from scratch. From January 1, 1995 to the end of the first quarter of fiscal 1998, AgriBioTech has completed 17 acquisitions. These deals have vaulted the seed purveyor from basically zero dollars in sales for all of calendar 1994 to an annualized revenue run-rate of $161.8 million at the end of the first quarter of 1998. WHERE TO FROM HERE? Given the company's success in building up a business around forage and turfgrass, the possibility of it eventually becoming an acquisition is very real, although certainly nothing one would want to wager on. Cash flow is about double earnings due to non-cash depreciation and amortization charges, but even this does not make the company cheap. Investors should recognize that at this valuation, the risks have increased substantially relative to the $2 and change they were paying for these shares only twelve months ago. -Randy Befumo