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

To: Michael Burry who wrote (5838)	1/23/1999 2:39:00 AM
From: James Clarke	Read Replies (2) \| Respond to of 78476

repost of something on the ag tractor business I posted on another thread. Seemed relevant here too. In the spirit of full disclosure, I cover these professionally, so I know the managements well and have visited dealers and driven combines and all that. But nevertheless, I will admit that I have done nothing but lose my clients' money so far. I bought NH at 18, CSE at 47, 28 and 22; and DE at 31. RESPONSE TO SOMETHING ON AGCO 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, and a rock solid 4% dividend yield. I own New Holland personally, and own DE, CSE and NH professionally. Expect to be bored out of your mind if you buy NH, however. Peter Lynch said again and again that boring is good. If he's right on that, NH is going to triple. The way I look at it is that if you bet on a horse that survives in this industry, you are going to at least double your money when the recovery comes. I would not bet on that being next year, but within 3 years is pretty safe. Within 5 years is as close to certainty as you get in the investment world. A double in five years is a 15% IRR return, plus dividends. Thats your downside if you play this sector right (i.e. buy now near a low and don't get scared out of them, and forget about them until everybody loves them again, even though that might be 2004). 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. And that would be precisely my ranking of them as investments at this point. Hope this is helpful. JJC

To: Michael Burry who wrote (5838)	1/26/1999 11:59:00 AM
From: Paul Senior	Respond to of 78476

Hi Mike: re UBB and funds. I see that at least one mutual fund manager who I've reported as recommending UBB -- it turn out now-- he says now he has been hedged on the rial-but he never said that in any of his media interviews. Much easier to be bullish on UBB when you are in a hedged position. I believe UBB holds a lot of Brazilian debt; I don't know where the rial will settle; and I don't understand what turmoil it will cause businesses and individuals. While this may be factored already into the price of UBB, UBB has traded below 8 in the first scare on devaluation. I would rather back off now and reenter at a later and maybe lower price. Mike, seems like that's what you've been doing with some of the other stocks we've both owned - TIE, etc. - and IMO, that's been much more effective (having an exit plan on bad news) than what I've been doing (holding as they disintegrate). With the UBB funds: I've also sold a small amount again of BMY (which I have been wrongly peeling off scale-up from 44 - I should have just been holding this one- that's all I needed to do. --Funny how a position or sale in one stock can have more of a potential or actual affect on a portfolio than a combined total of 25 other stocks). I've made purchases in past few days which you've seen posted here. Also have started a position in Kerr McGee (KMG) as a relative dividend play. And adding to defense contractor Northrup (NOC), electronics distributor Marshall Industries (MI), and entertainment stock Dave & Buster's (DANB). Paul