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To: Robert G. Harrell who wrote (1501)10/18/2002 11:00:47 PM
From: robert b furman
   of 6936
 
Hi Robert,

Just wanted to say thanks for the link.

That perhaps recaps my firm belief -much much better than I could ever had said - outstanding and THANKS for posting it.

Bob

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To: The Ox who wrote (1495)10/19/2002 12:10:47 AM
From: akmike
   of 6936
 
Hello Michael Happel and welcome. It is always good to get fresh viewpoints. In that regard, how did you happen to come by here? Some of us have been here for so long that we have run out of questions to ask each other. (or at least suspect that we know the answer before we ask the question).

If you would share your thoughts, what do you think about KVHI?

If you have questions about the company, we like to be challenged.

Best regards,

Mike

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To: Robert G. Harrell who wrote (1501)10/20/2002 10:20:20 AM
From: dvdw©
   of 6936
 
Greetings Robert; me thinks your distillation of the article is applied well. We are entering a bold new era of applied technology. In the coming wave there will be several distinct classes of innovations which might include or be grouped as follows;
1. Applications of systems to new uses for the purpose of improving performance & connectedness of last generation products and methods.
2. Applications of New Materials to replace old materials that we've come to know as environmentally unsound or wasteful in their application & utilization of energy, space, and labor.
3.As the history of the PC /internet shows, these have become baseline system for accounting & communications,as a platform, upgraded to a level where world wide economic actions are easily monitored, and enabled.
4.Next wave innovations will revolutionize energy, construction, and performance of devices which can be plugged into this network changing the way the world looks and works.
5. This essentially allows for the further decentralization of the economics of human action.
6. Culture will be something that happens after you go to work, there will be networked paradigm and a local one, where you can attempt to have a life within your cultural context yet be fully connected to the world wide work flow enabled by the last few decades innovations.
7. Devices designed to improve the efficiency and productivity of the network itself will fuel innovation & productivity. Sensors to see, feel and touch the interaction of humans in their local environment will fuel world wide growth.
8. Says LAW of Comparative advantage will dictate the shifting of work to the places where labor and material can be most efficiently deployed.
9. Space will extend the options of the entreprenuer beyond terra firma. To Include the depths of the seas off every coastline to the orbit of factories extending the possibilities for improving the well being of all of us.
10. Parallel revolutions have occured in the Life Sciences & other fields like energy, i.e. the Human Genome project, these will contribute to parallel extensible revolutions in bringing better health and welfare to populations everywhere.
The last 30 years, should become the foundation for the next hundred years, only our imaginations will limit our success in meeting the challenges of all of us on this big blue marble and beyond.

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To: dvdw© who wrote (1504)10/22/2002 1:34:17 PM
From: Sector Investor
   of 6936
 
Upticked made a great post on Yahoo! last night and it needs to be posted here as well.

Guru's 5 things to look for . . .
by: Upticked

I was reading about a successful stock guru, and when he was asked by the interviewer how he got interested in stocks, he replied that it wasn't that he was so much interested in stocks, but that it was the great story that fired him up. He said he got excited when he discovered some great product, a dynamic management, and something that has a competitive advantage. (Made me think of KVH.) He said discovering it early and understanding what makes it tick was the fun part.

Quote:

"The principal thing that makes stocks go . . . is early discovery."

He said he was looking for companies with huge upside potential--the big home run. And he said to do this, you need a company that is so exciting, it will capture the imagination of other investors. He said that you could look at ten stocks that have the same profile, the same big percentage increases in earnings, but that the ones that will really move early on are the ones that have the great story.

The interviewer then said, "By the time you hear this great story, isn't it almost certainly all over the Street already?"

And I love his reply, because I think it fits KVH well. He said, "Wrong. It may NOT be all over the Street. There are over 10,000 publicly traded stocks in the U.S. Even if the new idea is all over the Street, it takes time for firms to do their homework, especially the large banks, advisors, mutual funds and others with huge bureaucracies."

He then mentioned that most of the companies they buy are between $100 - $750 million in market cap. He said, "We are generally initiating our positions at about $150 to $200 million." So, I got to thinking that with KVH's $89 million market cap, we aren't even on some institutional radar screens yet.

Then he said that his job was to capture the companies early on in that huge growth phase, when you've got only two or three regional firms following it. (Needham--the Lone Ranger) He said, then if you have a great product, great management, then you've got a company that could become a Microsoft.

Then the guru gave five things that he looked for in stocks, and said that you didn't have to have all of these, but you needed most of them.

#1: Dramatically accelerating earnings.

He said that he wants 30% to 60% growth. He said if you have the great story stock—big product, great management, great service--that this is going to drive those earnings so powerfully that it will substantially change the nature of the company.

"If you can capture that, you've got two things going for you. One, you have the increased price of the stock, because the earnings are going to go up 60% instead of 30%. So you get 100% greater price appreciation because the earnings are going up higher. And two, if you're right in your assessment of the company's growth, you're going to get a multiple expansion. The market is going to say, wow, this isn't a 30% grower anymore, this is a 50% grower. So you get a higher multiple [price-earnings ratio]. Two bangs for your buck."

#2 Strong balance sheet

No debt or virtually no debt. If there is any debt, he says, that there should be good cash flow.

#3 Strong relative price strength.

He mentions that it is the concept of how well is that stock acting in the market relative to all other stocks? This guy says that if the median stock in the market has a relative strength of 50, then he wants 80.

#4 Wants companies in industries that are doing well in the market price wise.

He says that if you look at the industry's group rank, its industry's relative price strength, you want that to be doing well too, because it's awfully difficult for any company to be doing well in an industry that is doing poorly.

#5 Low institutional ownership.

Guru says that he wants to be in the first wave of institutional buying, long before the majors are buying it.

He says that he wants the company's sponsorship to be young and small with limited brokerage coverage, because they want to be ahead of the big buying programs of the majors that will undoubtedly follow as other investors discover what he already knows—a potentially great company, a great investment opportunity in the making.

Does any of this remind you of a little company in Rhode Island?

All this reminds me to hang on for the long term and not be enticed by the first move up.

Upticked

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To: Sector Investor who wrote (1505)10/22/2002 1:38:57 PM
From: Sector Investor
   of 6936
 
And I responded with some analysis.
===========================================================

<<He said he got excited when he discovered some great product, a dynamic management, and something that has a competitive advantage. ...

He said, then if you have a great product, great management, then you've got a company that could become a Microsoft.>>

Them's big words, pardnuh.

Back in the 1980s, the phrase might have been "the next IBM". Who back then could have identified Microsoft as a potential candidate to surpass IBM? It took many years for the world to come to that recognition.

Lots of things can happen between here and there, but let's not dismiss that out of hand.

Let's examine those three qualities and five criteria further.


Dynamic management.
We definitely have that. Back in 2000 we were just turning profitable, when Martin saw some "Brass Rings" in the marketplace and reached for them, knowing it meant more losses and giving a large chunk of the company to institutional investors to raise cash. Now we are back, not only with improved products, but with MUCH LARGER markets opening up to us.

Competitive advantage.
The key to ALL of KVH's products is their special Polarization Maintaining fiber that they got with the Andrew Corp purchase. This is sometimes overlooked here. It's the polarization properties that allow all the technology based on it to work. The fiber, the entire production process, and key aspects of their technology all ALL PATENTED. They MAKE the fiber inhouse. This is a HUGE COMPETITIVE ADVANTAGE.

Great Product(s)
We certainly have that as well. TracVision now has a stranglehold on the RV market. The Inmarsat products and service have similar advantages because Inmarsat's coverage is truly global. TACNAV is now integrated into many military programs, domestic and foreign. The DSP technology, further enhanced by PhotonicFiber technology, has brought KVH FOGs into the tactical grade area, opening huge new markets, and they have significant price, performance, size, weight, vibration, usage life gains over their mechanical ring-laser gyro, or oil filled transformer competition.

KVH does indeed meet these three qualities - in spades.

The five criteria.

#1. Dramatically accelerating earnings.

We're not there yet, but we WILL BE in 2003. With no income tax for the first 30 cents or so of earnings and top line growth seemingly assured, the bottom line will accelerate faster than the top line. The penny we just made should be a dime or more per quarter before the end of next year.

In 2002 though, we have dramatically accelerating REVENUE that will approach 50%, and a cross over to profitability. Let's call this a pre-cursor of things to come. <g>

#2 Strong balance sheet. No debt or virtually no debt.

I don't have to elaborate on that criteria. We meet it.

#3 Strong relative price strength.

A picture is worth 1000 words, right? Gee, let's use MSFT vs KVHI over the past two 1/2 years.http://www.siliconinvestor.com/research/comp_chart.gsp?cs=KVHI&cs=MSFT&cs=&cs=&cs=&cs=&cs=&n=30&p=month

or against the general market:http://www.siliconinvestor.com/research/comp_chart.gsp?cs=KVHI&csi=COMPX&cs=&csi=INDU&cs=&csi=SPX&cs=&cs=&cs=&cs=&n=30&p=month

We meet this criteria too.

#4 Wants companies in industries that are doing well in the market pricewise.

I'll stick with the graphics.

Defense sector since 9/11: (Boeing is a special case because of the airlines, so omitted)

siliconinvestor.com

RV sector. Fleetwood is also a special case because they do a lot of modular housing, which was hard hit by the economy. Included.

siliconinvestor.com

I don't know of any direct comparisons for FOGs and sensors. We seem to meet this criteria too.

#5 Low institutional ownership.

This is not as low as the Guru would like. This would likely be more so the case if I hadn't been here posting the last two 1/2 years, waving my hands. <g> Institutional ownership is just under 43% Perhaps we can grade a half point here? nasdaq.com


So I make it 3 1/2 out of five on the criteria right now, and 4 1/2 out of 5 by next year, plus all three of the qualities. I think the Guru might pick KVHI if he was aware of it.

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To: Sector Investor who wrote (1506)10/22/2002 4:28:08 PM
From: Robert G. Harrell
   of 6936
 
That article reminds me of the Motley Fool's Foolish 8 criteria for finding great small cap stocks. One of my best investments was in THQI which I found on the Foolish 8 message board in 1996. A young accountant, who was as diligent as you are in researching stocks, posted all the pertinent information. The company had just fired the founder, done a 10 for 1 reverse split and hired the CFO Brian Farrell as the new CEO. They weren't even listed on the regular NASDAQ yet. I bought my first shares for $5 pre many splits and saw my money double each year for at least 3 years before I stupidly sold it in the 20's before it went over 40 in '01 (to buy more MRVC, ugh!!!).

What I really like about these small companies is that a handful of diligent investors can gather and post information and build a base of information equal to or better than the wall street pro's if they even cover the stock. In the early years of THQI's growth there was very little or no coverage. There was a large cult following on the AOL Motley Fool THQI board. They would go out and do channel checks of the video game sales in stores all over the country and got very good estimates on sales. Even after the company got analyst coverage in the pre reg. FD era, the group's profit estimates were always much better than the analyst. KVH has the same feel to me as THQ did a few years ago. If KVH experiences the kind of growth that THQ did, it won't matter if you bought recently at $3 or $5 or $10. The difference will seem minuscule after a few splits.

Here are the Foolish 8 criteria as they exist now. They've refined them some over the years.

One method for locating solid small-cap companies is through "The
Foolish 8." The Foolish 8 refers to eight qualities that we look for in
growth stocks, as laid out by David and Tom Gardner in the The Motley
Fool Investment Guide.

Our list of Foolish 8 principles.

1.Relative strength of 90 or more
2.Minimum price of $7 per share
3.Daily dollar volume between $1 million and $25 million
4.Sales and earnings growth of 25% or greater
5.$500 million or less in sales
6.Net profit margin above 7%
7.Insider holdings of 10% or more
8.Positive cash flow from operations

The Foolish 8 isolates small, profitable, growing companies. The list itself
does not comprise our final selections, but we often pick our purchases
from the list. Every month, we publish a Foolish 8 spreadsheet that
identifies companies with these desirable qualities so that you can spend
your time on researching these various investment opportunities in
hopes of finding small-cap winners. Also, a Foolish 8 company is
highlighted in each edition of The Motley Fool Select.

excerpted from fool.com

They sell a list of the Foolish 8 companies updated monthly for only $50/year.
foolmart.com

Bob

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To: Robert G. Harrell who wrote (1507)10/23/2002 7:21:00 AM
From: robert b furman
   of 6936
 
HI Bob,

It really wasn't that long ago that the only fund invested in KVHI was the University of Wisconsin.

Due to their original support they were one of the funds allowed to provide additional funding for an equity private offering.

I like the long term positive relationships that management seems to be able to build.

In Texas we call it dancin with the one that brung ya.

It's a good thing.gg

Bob

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To: robert b furman who wrote (1508)10/23/2002 2:22:42 PM
From: Sector Investor
   of 6936
 
Wednesday, October 23, 2002 Posted: 11:15 AM EDT (1515 GMT)


WASHINGTON (AP) -- With strokes of his pen Wednesday, President Bush signed into law a bill giving him the tools he wants to wage an expensive, no-end-in-sight global fight against terror and possibly Saddam Hussein.

"Our nation faces grave new dangers, and our nation must fully support the men and women of our military who confront these dangers on our behalf," Bush said before signing legislation providing a hefty increase in defense spending and financing for military construction projects in 2003.

"The bill says America is determined and resolute to not only defend our freedom but to defend freedom around the world, that we're determined and resolute to answer the call to history and that we will defeat terror," Bush told a Rose Garden audience of mostly uniformed military personnel, along with a handful of lawmakers.

The spending measures were the first of their kind to become law -- three weeks after the start of the 2003 budget year.

Lawmakers who were deadlocked over spending decisions and anxious about midterm elections left Capitol Hill last week to campaign. They plan to finish the other 11 required spending bills in a lame-duck session after the November 5 voting.

The $355.4 billion defense bill, approved with overwhelming support to provide most of what Bush requested, increases spending by more than $34 billion over the previous fiscal year. Bush sought $367 billion, but ran into bipartisan resistance to his proposal for a $10 billion fund he could tap without congressional input for combating terrorists overseas.

"It's the largest increase in defense spending since President Reagan was the president," Bush said Tuesday as he stumped for candidates in Bangor, Maine.

"Any time the United States of America sends our youngsters into harm's way they deserve the best pay, the best training and the best possible equipment. ... It doesn't matter how long it takes to defend freedom, we'll do it. ... We have a duty to future generations of Americans to make this land secure."

With a day of work in Washington sandwiched between campaign swings and other travel, Bush was urging the Senate later Wednesday to follow the House's lead and approve legislation to bypass a Supreme Court decision that struck down a ban of computer simulations of child pornography. Bush was hosting a private forum on the sexual solicitation and exploitation of children over the Internet, followed by the public address.

The events are a follow-up to the October 2 White House Conference on Missing, Exploited and Runaway Children. Bush focused most of his attention and remarks at the time on kidnapped children but noted that during a single year one in five children between the ages of 10 and 17 are sexually propositioned online.

On Wednesday, he was also encouraging parents to teach their children about online safety.

"The threats to our children are found not just on our streets, but they're found in the technology which we use in our homes," Bush told the conference. "With expanding use of the Internet and the heightened activity of predators searching for underage victims, more children are being lured into harmful and even tragic situations."

In April, the Supreme Court struck down as unconstitutional and too broad part of a 1996 law intended primarily to stop pornography produced through computer wizardry that was not available when the court placed child pornography outside First Amendment protection in 1982.

Free-speech advocates and pornographers challenged the ban on material that appears to be a child in a sexually explicit situation or that is advertised to convey the impression that someone under age 18 is involved.

The bill Bush was promoting would prohibit the production, distribution and possession of any visual depiction, real or electronic, of prepubescent children engaged in sexually explicit conduct.

With the military moving toward a war footing with Iraq, the defense measure increases spending in almost every area, from weapons procurement to payroll. It includes a 4.1 percent pay raise for military personnel and almost all the $7.4 billion Bush requested to keep developing a national missile defense system.

The defense bill also provides:

•$3.3 billion for 15 C-17 transport aircraft

•$2.3 billion for two Aegis destroyers

•$3.2 billion for 46 Navy F/A-18 E/F fighters

•$3.5 billion to continue developing the Joint Strike Fighter

•$249 million is allotted for Navy Tomahawk cruise missiles, a prime weapon in the Persian Gulf War.

Nonmilitary federal programs are operating on last year's budgets, under a fourth temporary funding bill that is good through November 22.

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To: Sector Investor who wrote (1509)10/23/2002 2:39:23 PM
From: robert b furman
   of 6936
 
Somewhere iN 355.3 Billion lies opportunity for our little screamer.<VBG.

Bob

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To: robert b furman who wrote (1510)10/23/2002 3:10:34 PM
From: Sector Investor
   of 6936
 
Yes indeed Bob,

Here is the post House-Senate conference version from earlier this month. This is what the President signed today. Go in about 160 pages to see the detail items. Lots of KVH programs are in there, plus many others they might have bids for gyros in on.

house.gov

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