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

To: Paul Senior who wrote (5169)	10/20/1998 8:46:00 AM
From: Ron Bower	Respond to of 78817

Paul, I agree with you on 'not putting eggs all in one basket' and continually make this statement regarding DSWLF. This definitely applies when equities/bonds are your only form of investment. I have put a concentrated amount in Deswell, but it is only a small portion of my total as most of my investments are not market related. One might suspicion 'cooking the books' except the $8.00 BV of Deswell is primarily cash in bank. The auditors are Deloitte Touche and there's nothing easier for an auditor to check than bank deposits. There are many reasons the BV is so low. One is the high dividend payout. Another is a very fast depreciation schedule of 3-5 years on their only fixed asset of machinery (they own no property). Dividends are not taxed in HK/China and it's the primary source of income for management creating a low overhead. They also have a very low tax rate around 8%. All of this contributes to a high margin return. I'm not arguing with you about the merits of ELAMF as I feel it to be well under value, but IMO that DSWLF presents a much better buy. We have an $8.00 stock selling at $4.25 against a $30.00 stock selling at $8.59. The bias you show against HK/China stocks is one of the major reasons for the low price, not the fundamentals of the company. It is also down because there apparently was a fund forced to sell off it's position. Deswell had about 200K shares 'dumped' last week. My best, Ron