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

To: Brendan W who wrote (5302)	11/21/1998 1:33:00 AM
From: MCsweet	Read Replies (1) \| Respond to of 78594

Buyback Regarding LDRY's buyback, I think that to best serve their existing shareholders, most companies should offer stock when it is overpriced and buy back when it is underpriced. (Unless they really don't need the money in the case of selling and do need the money in the case of buying back.) So I am almost always happy to see these buybacks. Of course, I can't praise management in light of poor performance leading to huge stock declines, but you have to put some of the blame on shareholders for over-optimistic expectations, even if management encourages some of these expectations. For instance, I would not blame the executives at Yahoo (or any of these internet stocks) if their shares went to 1/4 of their value, considering that it is the shareholders themselves that have priced in such high expectations. MC

To: Brendan W who wrote (5302)	11/21/1998 1:40:00 AM
From: MCsweet	Read Replies (4) \| Respond to of 78594

Buying on stocks on sale In the spirit of STAR and LDRY, we have Rainforest cafe RAIN, a growth stock turned value with solid cash flows and earnings, no debt, PB < 1, and lots of cash. (IPO at 12 and Secondary offering at 21, now at 7 and company has been buying back) It appears that investors are now unhappy with "theme" restaurants (Dave and Busters, Planet Hollywood, etc.) In light of low expectations, I think RAIN offers a good risk/reward trade-off. In a different arena, Thornburg Management (TMA) looks attractive. It is a beat-up mortgage REIT. I know mortgage REITS are not exactly high-quality investments (generally are highly leveraged and cash flow negative, yuk), but TMA appears to be the most forthcoming and conservative of the bunch. It is way below book value (and book value consists of actual investments, not property) and lowered interest rates should greatly help company. The most major risk is a lack of liquidity such that it would have to sell off its investments at bargain basement prices. However, it is buying back stock and paying high dividends, so apparently it thinks it can weather the current crisis in debt markets (caused by Asian crisis and LTCM) and return to solid earnings growth. Also, the CEO bought $600K worth in Oct., so he is putting his money where his mouth is. So I would suggest TMA as a somewhat speculative buy. I am extremely high on TMA, with my reservations due to high debt and my lack of understanding of the nuances of the mortgage industry (although my understanding has been approving as I have been tracking the industry for the past few months). Any thoughts on these or related stocks would be welcome. MC