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Non-Tech : New Holland and the Ag Equipment Group -- Ignore unavailable to you. Want to Upgrade?

To: Bob Rudd who wrote (47)	1/23/1999 2:28:00 AM
From: James Clarke	Read Replies (1) \| Respond to of 113

Agco is cheap. As are its three major competitors, Deere, Case and New Holland. We are just beginning an ag recession. That is not the time to buy the company with the worst balance sheet in the industry. That would be Agco. Case's balance sheet also troubles me, but its core products are closer to Deere than any of the competitors. My pick here would be to pay up for the best of the best, when you can buy it cheap - that would be Deere. At $31 (be patient and wait for that price - it will bounce off there again) the long term risk is minimal no matter what the market does. Or if you want to be a cheapskate, buy New Holland. Solid products, solid management, very conservative balance sheet. I own New Holland personally, and own DE, CSE and NH professionally. The way I look at it is that if you bet on a horse that survives, you are going to at least double your money whenever the recovery comes. I would not bet on that being next year, but within 3 years is pretty safe. Within 5 years is certainty. A double in five years is a 15% IRR return, plus dividends. Thats your downside if you play this sector right. So how can you be sure the horse you bet on finishes the race? Look at the balance sheet. In order of safety, #1 is DE, a close #2 (and much much cheaper) is NH, and a distant 3 and 4 are CSE and AG. Hope this is helpful. JJC