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

To: Bob Rudd who wrote (6005)	2/9/1999 3:05:00 PM
From: Bob Rudd	Respond to of 78508

REIT's ETT & Hi Yield Health Care REIT's Just added to position in ETT today @ 7.75 with yield of 18.8%. I talked to CFO last night and came away reassured about the security of the dividend despite GHV PPS issues discussed in Press release pasted below. Risk factors ETT is highly exposed to GHV & GHV has some uncertainty related to PPS, but Merrill report indicated above average dividend coverage vs similar REIT's biz.yahoo.com Note: Insider buying by Lee McCreary, the CFO...nobody oughta know better if it's real shakey. The source of a lot of this pain, PPS, a ceiling on payments to nursing home operations, could go away if these really start circling the drain. The demographics of demand for elderly care call for more not less of these facilities. The elderly vote as do middle aged folks charged with thier care. When these voters begin to see the limited range of choices that have resulted from Congressional attempt at defacto price control....it won't be happy times for congressional types. This is the catalyst for favorable change...fear of being voted out of office triggered by complaints of poor options. ElderTrust Announces Quarterly Distribution Highlights -- Authorizes fourth quarter 1998 distribution of $0.365 per share, based on an annual distribution of $1.46 per share -- Addresses recent Genesis Health Ventures earnings release KENNETT SQUARE, Pa., Feb. 9 /PRNewswire/ -- ElderTrust (NYSE: ETT), a health care REIT, today announced that it had authorized the payment on or about February 26, 1999, to shareholders of record on February 18, 1999, of a quarterly distribution, covering the fourth quarter ended December 31, 1998, of $0.365 per share, which represents a pro rata distribution based on an annual distribution of $1.46 per share. In response to growing concerns about the long term health care industry, ElderTrust also today addressed recent announcements by its primary tenant, Genesis Health Ventures, Inc. (NYSE: GHV), and other long term care operators. Genesis' recent first quarter 1999 earnings release and pre-announcements of earnings disappointments by Sun Healthcare Group and Vencor have heightened investor concerns about the impact of the new Medicare Prospective Payment System (PPS) on operator cash flows. These concerns also appear to be reflected in recent trading activity for the healthcare REIT sector as well. "We believe that the implementation of PPS is just one of several factors impacting the healthcare industry and each company in the sector has a different story," said Edward B. Romanov, Jr., ElderTrust President and Chief Executive Officer. "However, as we announced last October ElderTrust continues to monitor PPS' impact on our properties and we have seen no significant deterioration in our portfolio's operating income. Furthermore, in spite of recently announced earnings that failed to meet street expectations our primary tenant Genesis Health Ventures, continues to generate increasing overall cash flows and generates approximately 50% of its revenue from its pharmacy business. As reported by Genesis Health Ventures Inc. in the above noted earnings release, its net income for the quarter ended December 31, 1998 declined to $5.2 million from $10.9 million for the comparable period one year ago. However, its earnings before interest, taxes, depreciation and rent increased by 24% to $71.2 million compared to $57.2 million for the earlier period. Mr. Romanov added, "We also believe that the REIT sector continues to be an under appreciated segment in the overall investment marketplace. Internet companies such as Yahoo, Lycos, Excite, uBID, Amazon and Network Solutions continue to attract significant market attention while REITs, on the other hand, have attracted little positive attention since falling out of favor in 1998. This is in spite of providing attractive dividend yields in a falling interest rate environment." ElderTrust distributes $1.46 per share per year which yields 16.22% on a $9 share price. ElderTrust is a real estate investment trust that invests in real estate properties used in the healthcare services industry, principally along the East Coast of the United States. Since commencing operations in January 1998, the Company has acquired a portfolio of 27 buildings and has loaned $47.5 million in construction and term financing on 10 additional healthcare facilities. Certain matters discussed within this press release may be deemed to be forward looking statements within the meaning of the Private Securities Act of 1995. Although ElderTrust believes the expectations reflected in such forward looking statements are reasonable assumptions, it can give no assurance that its expectations will be attained. Factors that could cause actual results to differ materially from ElderTrust's expectations include real estate conditions, information determined in the course of due diligence review, changes in economic conditions and other risks detailed from time to time in the Company's SEC reports and filings, including its Form 10-K as well as quarterly reports on Form 10-Q and reports on Form 8-K. The Company assumes no obligation to update or supplement forward looking statements that become untrue because of subsequent events.

To: Bob Rudd who wrote (6005)	2/9/1999 3:14:00 PM
From: Grommit	Read Replies (1) \| Respond to of 78508

XPRSA TCAM -- Hi folks, This is my first post here, since I just found this thread. But as a value investor, I plan on becoming a regular if the suggestions and tips are useful. I will offer the following -- I am a big fan of the trucking industry right now. I think it is defensive due to the low valuations and since the foreign exposure is limited -- real limited. My 2 favorites are xprsa and tcam. tcam has very very low volume but is more undervalued. Both just released earnings and made around $1.40 each for the 1998. Both had around $1.15 in 1997 and both are expected to do $1.65 +/- in 1999. quote.yahoo.com TCAM released earning last night and you can hear the CC over the net vcall.com Let me know what you think? Oh yeah -- Not much activity in the XPRSA thread here. Subject 21752 No TCAM thread. A few decent followers on yahoo. No issues. Seem like relatively safe 15-20% growers with PE around 10. In 1997 the PE ratio of XPRSA was generally over 18. As you can see here: marketguide.com PE for the trucking industry has been 12.5 to 30.5 over the past 5 years according to this: marketguide.com One more thing. With TCAM's just released 1998 earnings -- there was (.15) loss due to results of a division which they just sold -- sold it because they could not develop it. Sold it to someone already in that subsector. So EPS excluding that loss was a bit higher. But they do not make a big deal of it and did not separate it in the income stmt, just in the commentary. upside, upside, upside... regards, grommit

To: Bob Rudd who wrote (6005)	2/11/1999 7:49:00 PM
From: James Clarke	Read Replies (3) \| Respond to of 78508

<<Service Corp: The funeral industry has really taken a hit because of lower death rates...Like these folks are now immortal or something. Anyway, Jim you mentioned concerns about financials..possible accounting fraud. Could you expand and update on what you're seeing..because this bunch is lookin pretty appealing at these prices. Gabelli just filed a 13-d indicating 5+% stake in LWN...a significant contrarian play considering the vast majority of news announcements in the past month are class-action shareholder lawsuits.>> The fact that Gabelli is buying Loewen and not Service Corp. should speak volumes. I didn't respond to this immediately because I had nothing to add to my previous statement. I remain concerned about the financials, meaning that I have a hunch that you don't want to use historical earnings to value this stock. I generally look at cash flow statements, not income statements, and the cash flow statement and the balance sheet paint a very different picture than the income statement. Lets just say this. When I see a company with a 12% return on equity being hyped as a 20% grower, I am very suspicious. If this business were the gold mine that Wall Street thinks (thought?) it is, ROE would be a lot higher than 12%. The resignation of the President of the company today tells me I was onto something. The conference call yesterday also tells me I'm onto something. They completely failed to explain how they could have missed such a drastic change in the death rate. This should be an actuarial business. If there was such a sudden change in the death rate, why aren't life insurance companies blowing out their quarters? Why aren't Service Corp.'s competitors posting similar numbers? There is another shoe waiting to drop here, and I would be very wary of buying this company before it does. I was instantly suspicious, without knowing a thing about the business, when I read the initial press release. It just didn't make sense to me. When you're dealing with what you suspect are misleading financials, you have to shift to a different level of analysis. First, forget the historical earnings, assume they are going to be restated. Value the company off the cash flow statement, which would take outright fraud to mislead on. Second, pick a nonfinancial event as your buy signal. Maybe its justice department action. Maybe its the resignation of management. The point is that I could care less what P/E is because I don't believe the "E". Third, look back at similar situations over the last couple years. I would point to Oxford Health and Cendant. Then ask yourself whether you would have been happy to buy on the first big drop? Or the second? Maybe I'm wrong, but I was sitting across the table from an analyst today who was telling me this stock is a no-brainer. I just wanted to respond, "only for an investor with no brain". But I was nice. Maybe I'm wrong and this is going to be a double in six months, but the only point I am making is that there is still a hell of a lot of risk here if this story plays out how I think it will. I have no evidence of fraud and I am not making accusations. I am only pointing out what my instinct tells me is high risk which I do not think is in the price yet. I've read a lot of 10-Ks and I've read SRV's. It made me say wait for single digits. JJC