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

To: Paul Senior who wrote (5419)	12/14/1998 2:19:00 PM
From: Wallace Rivers	Respond to of 78714

Thread, I will mention Capstead Mortgage (CMO) for examination, as someone else here did recently. Will have 550 mil. coming in the till soon as a result of selling off the mortgage servicing portfolio. Break up value factoring in the preferred is a bit north of $7 per share IMHO and using rudimentary calculations. Stock trading a bit north of 4 bucks. Anybody's comments after performing their own DD appreciated. There is a thread which has gotten active again on SI.

To: Paul Senior who wrote (5419)	12/14/1998 4:53:00 PM
From: rich evans	Read Replies (1) \| Respond to of 78714

As a value invester you might want to check out HXL, about 5.5 PE close to book and should grow according to management to double the revs in year 2000 at 15% operating margin. Debt high at 850000 about 2.5 times equity but has a credit backup with CIBY who owns 48% from merger of spin off. Management figures 100 mill cash flow rate next 15 months. Business is growth in materials composites and diversified down to 50% aerospace. Carbon fibers was in short supply causing inventory glut from overstocking.I sold it at 28 but have bought back in fairly heavily under 8.. 47 mill diluted shares and 36 mill basic and management is good and buying back another $10 mill in shares. Regards Rich

To: Paul Senior who wrote (5419)	12/14/1998 8:03:00 PM
From: Freedom Fighter	Read Replies (1) \| Respond to of 78714

Gee Paul why the attitude, >>-g-. We don't need to Crimi it though. That we "feel" stocks are overvalued, or we "feel" that things are going to get worse, or we "think" that Greenspan is a turkey -- acting on these feelings destroys the value investing methodology --- That's my feeling anyway -g-. Paul.<< Considering he asked whether the current market felt like July, I thought that a yes it does FEEL like July answer was satisfactory. The original poster and myself were obviously talking about the market action and the broadness of the rallies. This sort of stuff is outside the scope value investing but it addressed the question. The market IS acting like it did just before the recent correction. I never act on my feelings when I invest or otherwise. Nor did I suggest anyone else do so either. I never said I think Greenspan is a Turkey. We have a monetary system that can create excesses. In general, easy money causes consumer price inflation. But in this case it caused asset inflation because that's where a lot of the easy money was directed. Mr Greenspan had every opportunity to cut those excesses short prior to the problems in Asia. He chose not to because he believes asset prices are outside the scope of his job. (even though he thinks we are in a Bubble too!) I think he has made a great error for which we are all going to pay eventually. The experience of Japan in the 80s and the U.S. in the 20s suggests that central bankers should pay attention to asset prices. I also don't believe that understanding why we are where we are is outside the range of useful knowledge for any investor. Without an understanding of the nature of what is going on, it isn't possible to value companies properly. In a bubble, the income streams are suspect because outsized capital gains are driving the economic activity to a larger degree than is normal. There are also all sorts of corporate pension allocation and other considerations that make a bubble different from a normal economy. How many companies that presently have multi-billion dollar pension funds for their employees would be forced to come up with enormous amounts of money if the stock market reverted to its mean and they were suddenly very underfunded? Where would consumption levels go if we had a bear market and everyone started saving at normal levels instead of negative levels? That's why I bring it up. That's why it's important for VALUE GUYS too. Many, if not most companies are earning more than they would under normal conditions. Some companies in the financial services industry aren't worth anywhere near what their current earnings streams suggest. Since I am trying to help, I hope you will at least think about why I am talking about these sorts of things instead of trashing my every post because I didn't say what YOU wanted to hear. Your companies may not be worth what you think! I am addressing general valuation considerations that most people are overlooking. You don't have to agree. You don't have to read what I say. Some people would like to though. Wayne Crimi