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

To: TwoBear who wrote (6658)	4/9/1999 5:16:00 PM
From: Michael Burry	Read Replies (2) \| Respond to of 79253

Great post TwoBear. Being in the medical field myself, so close to Varian, and having my mom worked at Varian for quite a while, I've been watching it and thinking, too. My biggest fear is that it is capital equipment prone to cyclicality. But on reflection (after your post -before, I hadn't thought too deeply on it) I can see the demographics actually favor VAR. I'll keep looking. I like this part best: Another benefit is the that these machines have to be serviced often. Guess who provide the service. Yep, Varian. Thanks, Mike

To: TwoBear who wrote (6658)	4/9/1999 6:11:00 PM
From: Stewart Whitman	Respond to of 79253

TwoBear, It doesn't look to me like you've adjusted your numbers to take into account the spin offs of VESA (semi equip) and VARI (instruments). Or maybe my numbers are wrong. You're talking about the surviving corp. (VAR - a.k.a Varian Associates, a.k.a Varian Medical Systems). Pro forma (from their 8K), they have about $540m in sales, $29m? in cash, $152m in equity, $1.27 EPS. Still not unreasonable. I'd be interested in a longer term outlook for growth (future and historical) - just eyeballing 3yrs: high single digit growth in rev. and mid-teen growth in EPS. Operating margins seem to be mixed too (again only 3yrs) - any input? competition?. Regards, Stew

To: TwoBear who wrote (6658)	4/9/1999 6:49:00 PM
From: James Clarke	Respond to of 79253

Re: VAR The numbers look like something that could be cheap, but the business is what's worthy of discussion. Also the fact that it is a spinoff makes me want to look at it. First impression. What jumps out at me in a big way is this (and I have done nothing on the stock but read your excellent post). These guys dominate their market. I just posted something two days ago about what I think of medical equipment "franchises" which begs the question: HOW LONG ARE PRODUCT CYCLES IN THIS BUSINESS? If the franchise is as strong as you say it is - and it certainly appears you've done your homework - why are they only making 10% on equity? And why are profit margins so low? This sounds like the kind of business that should be minting money. Is there some reason to believe that earnings are depressed or that they are going to ramp up in the near future? How long are product cycles? What does a 10 year history of earnings look like? Have there been recent entrants into the business. Are return on capital and margins going up or going down. A lot of questions, but those are the numbers I would focus on first. I would love to interview the management of this company. Once again, great post. That's the kind of thing that makes me download a prospectus and start reading it. And the kind of thing that makes this thread a good use of my time. IF this is a good idea, I would expect to hear it from my Wall Street sales buddies in about 6 months up 50%. JJC

To: TwoBear who wrote (6658)	4/24/1999 7:52:00 PM
From: Michael Burry	Read Replies (2) \| Respond to of 79253

TwoBear, ADAC just had some very bad news for the medical capital equipment sector. My biggest fear has been the shrinking pie of health care money despite a growing need, and it looks like this has put a hur on ADAC in a big way. Very pessimistic statements without much upside. How do you feel these developments should affect VAR? And do you know enough of ADAC to say when it becomes a good value play? Mike

To: TwoBear who wrote (6658)	4/25/1999 6:47:00 PM
From: Bob Rudd	Read Replies (1) \| Respond to of 79253

Glad to see your post regarding Medical equipment. I have a position in Lumisys, the leader in laser-based digitizers for teleradiology. Stock is 2 7/8 with 2.04 in cash, and they've just come out with CR unit that is supposed to offer better value than competing CR digitizers. This is a turnaround after overpaying for a software unit that hasn't helped sales. My problem is, unlike you and Mike, I'm not in the medical area and have to rely on secondary sources. Any experience-based info either of you could provide would be appreciated. I'm wondering if the PPS fog that's hurting earnings visibility in health care REIT's, hospital operators and such might be contributing to problems in equipment area. If operators are having tough time with rent, buying new geewhiz gadgetry could be out of the question or at least on hold till the situation clarifies. TIA, bob