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

To: James Clarke who wrote (7336)	5/27/1999 11:31:00 AM
From: Paul Senior	Respond to of 78625

Jim. Okay, good post. I think understand what you are saying. I like that you think there is a diversity of investment techniques - ways to determine value and worth and investment possibilities. I believe in diversifying among styles as well as stocks. In a Buffett context- Porter would have relevance. Want to use any information or ways of thinking about the business world (e.g. 5 forces) to help crystallize ideas. I think Buffett and Munger and Porter all have a lot of good stuff to say to value investors. Seems iffy to me though if anybody can make money investing from it.

To: James Clarke who wrote (7336)	5/27/1999 12:57:00 PM
From: Paul Senior	Respond to of 78625

Jim: re: preferring to respond here to LANC. Yes, I had just looked at it couple of weeks back. Dismissed it too quickly I think now. From caviar to floor mats. Didn't and don't understand how they could maintain such profits in at least 3 competitive industries -- oops -gg--. Arguing with myself -lol - guess I shouldn't care how they do what they do or that they are in so many competitive businesses - the fact that they can make good numbers for a value investor is what it's about (or so I said -lol). Ah, how we all must live with paradox. -g- Really a lot to like with this company. Very high ROE (how they do it with these businesses, I can't figure-- and it does weigh on me). Very little long term debt. And very long history of increasing dividends. LIKE 36 YEARS of increases. Sales and earnings and book value increasing every year from my '93 history. PSR and p/bv similar to previous years. PE at low end of a fairly small (it seems to me) annual range. This looks like a stock that one would buy and hold over many years for a very nice investment. Especially maybe for a child or for a DRIP account (assuming that that's available). Or potentially as a possible core holding for a retirement account. I'll consider it some more. Thanks. Paul.

To: James Clarke who wrote (7336)	5/27/1999 11:42:00 PM
From: TwoBear	Read Replies (1) \| Respond to of 78625

OK, here is a stock that is dog crap selling for less than the going price for dog crap, Novacare, Inc. (NOV). NovaCare, Inc. is a national leader in physical rehabilitation and employee services. The company treats patients in cost-effective outpatient and long-term care settings, and has achieved number one market shares in long-term care and orthotic and prosthetic rehabilitation. In addition, NovaCare is the nation's second largest provider of outpatient physical rehabilitation and occupational health services. Now the numbers: Per-Share Data Current price: $2.25 Book Value (mrq) $9.05 Earnings (ttm) -$1.76 Sales (ttm) $29.57 Cash (mrq) $0.24 Valuation Ratios Price/Book (mrq) 0.21 Price/Earnings N/A Price/Sales (ttm) 0.07 Income Statements After-Tax Income (ttm) $14.3M Sales (ttm) $1.86B Profitability Profit Margin (ttm) 0.8% Management Effectiveness Return on Assets (ttm) -8.14% Return on Equity (*ttm) -19.24% Financial Strength Current Ratio (mrq) 2.54 Long-Term Debt/Equity (mrq) 0.97 Total Cash (mrq) $15.2M Basically the stock tanked due to the effects of the 1997 Balanced Budget Act that reduced Medicare reimbursements for physical therapy in nursing homes, outpatient facilities, and at home care which is most of NOV's business. Since then management has begun restructuring and has sold off the prosthetics division to concentrate on core services and to retire debt. They have also closed operations in long-term care markets that were detrimental to revenues and earnings and concentrating on those that are profitable. The following quote from the last 10-Q is also interesting, "''We are encouraged that the debilitating impact of the BBA on the long- term care industry has recently begun to attract attention at the Federal government's administrative and congressional levels,'' said Foster. ''We are actively working with the long-term care industry and other trade groups to obtain both regulatory and legislative relief that will ensure that adequate reimbursement is available to Medicare beneficiaries receiving needed services.'' If this is true, it will only help the company. The following link is includes discussion from management about the rest of the company's services which I believe is positive. These services have to be provided so I believe that NOV has an opportunity to be viable. Besides the long term debt obligations what am I missing here? Looking for input, 2