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

To: Michael Burry who wrote (7168)	5/17/1999 12:56:00 PM
From: jeffbas	Read Replies (2) \| Respond to of 78814

Mike, I think we see here one of the pitfalls of a controlling owner. As I pointed out earlier today, an acquisition for stock would have been less terrible. However, the big holder's interests would have been diluted significantly. To re-emphasize one point, NH at $10 was not good enough for Fiat to quickly buy up its $250 million authorization last Fall and Winter, for its own account. However, they have now decided that 3 times the CSE low in cash is now a good idea for all NH shareholders, including them. If you take, as I do, last year's lows on both stocks, traded at for a very long time as the proper value relationship -- roughly 2 to 1, CSE/NH (or the all time highs which have a similar relationship), paying 3 to 1 in a $4B deal now in effect pays $1.3B or nearly $9 per current NH share over fair value. That is not that much below the current equity of NH!! Fiat mgmt should have read that study on synergies versus the price paid that we were recently discussing. Mike, there is no way that you could view this as a value stock now. I am just glad that you had the opportunity to get out at a decent price today, if you have a policy of getting out of stocks when the company nature changes materially.

To: Michael Burry who wrote (7168)	5/17/1999 1:13:00 PM
From: Bob Rudd	Read Replies (1) \| Respond to of 78814

Mike: <<The synergies are pretty blatant. But I can't see justification in the takeover price given the prices of the respective shares just a few months ago.>> Price comparisons are highly dependent on initial time chosen. I used a charting program to peg AG, CSE, & NH to DE [The big kid on the block] 1 year ago. At that time, all three were dancing together for 2 or 3 months...as opposed to a crossover which doesn't usually say much. Fast forward to Friday and there was again a convergence of CSE, NH, & DE though there had been wide underpricing of CSE & NH in the interim. AG is still well under the rest...it hasn't recovered based on that frame. Looking at book: AG is still selling well below book while Case is being taken out at nearly twice book. If AG is bid to just book, that's a 50% jump from here. Scarcity value: How many other global Ag plays are there out there?