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

To: Paul Senior who wrote (7020)	5/2/1999 4:23:00 PM
From: Michael Burry	Read Replies (2) \| Respond to of 78748

Tobacco keeps getting kicked in the teeth. And the implications are grim for a wide variety of companies, not just tobacco. Lorillard just lost a case filed by a man with mesothelioma, a type of lung cancer that is nearly always fatal and is linked to asbestos exposure. The man is elderly, and last smoked Lorillard's asbestos-containing cigarettes over 3 decades ago. The adverse health effects of asbestos were not known until over 2 1/2 decades later. Yet Lorillard is liable. This sounds ridiculous, especially, since Lorillard had added the asbestos to decrease the particulate emissions of cigarettes. Even more ridiculous is the man worked manufacturing airplane stuff for Owens Corning for most of his life. If ever there is a reason he got mesothelioma, it's this. So what did he do? He sued both, and Lorillard was found liable while Owens settled. Implicit guilt on both parties. To me, very sad, though not as ridiculous as an 80 million dollar judgement against Philip Morris for a smoker who died probably because he smoked Pall Malls (NOT a MO brand). But the net is that I am realizing the tobacco risk is very high, and that, while I won't sell my MO or UST positions yet, I will have to re-evaluate. The reason is that companies are being found liable on even the slightest suggestion that they might be liable. No proof necessary. And the awards are exorbitant. This sort of irrationality is a big wild card. This big "not my responsibility...but who can I blame?" attitude sweeping the country, especially in the aftermath of the Littleton disaster, is to me a big risk now for tobacco, gun companies, and eventually any company that makes high-fat food, or sells it. Watch out Cheesecake Factory. Future liability should be figured into the valuation of Keebler and any other dealer of fat. And don't forget sports equipment companies that entice adults to injure themselves running and such. Nike, beware. Meanwhile, I'm getting sick seeing such an outpouring of self-righteous hypocrisy and ignorance. So who can I sue for my nausea? Mike

To: Paul Senior who wrote (7020)	5/2/1999 5:08:00 PM
From: James Clarke	Respond to of 78748

In talking with Clayton management and Champion management about a year ago, I got a bad impression of Fleetwood. Clayton respects Champion and Champion respects Clayton, but they both dumped on Fleetwood management. I don't know what you want to take out of that, but that narrowed the choices for me. The way I look at it is there are many things that can go wrong in this industry (particularly in the finance portfolio), but somehow they never happen to Clayton. The other reason I didn't pursue Fleetwood further was the one you highlighted - peaking RV sales - just not a business I want to get involved in at this time in the cycle. JJC

To: Paul Senior who wrote (7020)	5/3/1999 1:22:00 PM
From: John Stichnoth	Read Replies (1) \| Respond to of 78748

Paul, I looked pretty closely at CMH, CHB and FLE a couple of years ago, when they passed some screen. It might have been Value Line's High Growth/Low PE list. I came away with the conclusion that they were all subject to chronic-low pe's, while subject to cycles (to which you alluded). I assume that you are looking for a combination of multiple expansion along with earnings growth. I decided at the time that I probably wouldn't get both out of the sector. So far, my decision was right. They have as a group underperformed the S&P during the period. That's not to suggest it won't happen in the future. Maybe the time is now for them. Other companies in the sector are Oakwood Homes (OH), Skyline (SKY), Coachmen (COA), Thor (THO), Winnebago (WGO). Values Line rates Winnebago and Thor as 2's. FWIW. Just a thought. Nothing to hang your hat on, of course!