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Strategies & Market Trends : Fatty's Donut Shop -- Ignore unavailable to you. Want to Upgrade?

To: Matt Brown who wrote (55)	3/16/1999 10:30:00 PM
From: Francois Goelo	Read Replies (1) \| Respond to of 5041

Fatt, this still does not answer: which is the most undervalued stock? eom

To: Matt Brown who wrote (55)	3/17/1999 10:23:00 AM
From: Francois Goelo	Respond to of 5041

Fatt, WCAP, earnings/capital appreciation and PE are very relevant... I am reposting the "Quizz" for the benefit of your thread, since you answered on another thread: Jeffrey, comparison between WCAP and CMGI is a NO BRAINER... 1) Famous CMGI has EPS of 1.08 and PE of 178! quote.yahoo.com 2) Much less famous, WCAP has EPS of $4.50 and PE of 5.47 quote.yahoo.com Hard Question: Which stock is the most blatantly undervalued???? I will give one share of XNET (or cash equivalent) for 1st correct reply!! Regards, F. Goelo + + + ---------------------------------------------------------------------- And now, the answer to your post: "Francois, re intelligent answer" EPS and PE are very relevant for the simple purpose of comparison with other Companies. On a punctual basis, (at a certain given point in time) there is no significant difference to the EPS, whether the holding is accounted for as capital appreciation or profit on sales of the holding. If the sale of the appreciated assets had actually occured, the actual EPS for the trailing 9 months would have been $4.58 and the PE just over 2, which is staggering for a Company that traded at the time I bought at $9 5/8. The difference, of course, is that capital appreciation may rise or fall in line with the underlying asset, whereas the net profit on sale of asset is a fixed figure, it's the past. So, if you have faith in the potential appreciation of these underlying assets, as I have, you prefer the future, which is appreciating unrealized gains, rather than fixed realized profits. While I am not an accountant, I see that WCAP is allowed to treat its unrealized "capital gains/net asset appreciation" as actual EPS, so that must be an accepted and legal practice. So, my personal choice is definitely WCAP, by a long margin Disclosure: Long 1000 shares. Regards, F. Goelo + + +