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

To: Terrapin who wrote (6155)	3/2/1999 10:14:00 AM
From: jeffbas	Read Replies (2) \| Respond to of 78476

My general experience is to ignore them, or consider it an opportunity to buy if a stock gets hit, especially if there is no clear mgmt failure. I would be a bit more careful if there was evidence of mgmt fraud (or phony books) -- only because the impact of the fraud being much worse (and harder to figure out) on the company than the second order effect, the shareholder lawsuit. You have to remember several things. The lawyers have no interest in their clients, only themselves. Therefore, their interest is collecting their fees not getting their clients anything. (The maximum recovery is less than 10% of the damage.) In collecting their fees, they have no interest in damaging the company's ability to pay them and most times companies have insurance coverage which mitigates the damages, and the lawyers clearly have any insurance in mind in the first place. They are almost always settled before trial, because of the lack of real harm caused by the company in most cases and the lack of real interest in their clients by the lawyers. That sounds quite cynical. However, I have participated in quite a few over the years and that is the way it works in practice.