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From: Paul Senior3/1/2008 11:15:12 AM
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Cover story in latest Barron's highlights several stocks recently discussed here: BONT, IAR, GTN, FCH. Barron's saying they might be buys now based on their high leverage (high d/e, low stock price) - if they can survive in this economy.

Some snippets:

FCH: "Despite the company's good financial results, FelCor stock is depressed because of concerns about the impact of a weaker economy on the lodging business. FelCor, however, should benefit this year from extensive renovations of its hotels in 2007...One reason that Hawks of Brigade Capital is bullish on FelCor is that growth in the supply of hotels is very limited."

IAR: "Any stock trading with a P/E ratio of two and a dividend yield of 25% is worth a closer look. Verizon Communications spun off its yellow-pages business as Idearc...Verizon put $9 billion of debt on Idearc, effectively creating a public LBO. That debt is proving a millstone amid a sudden weakening in phone-directory industry trends. The company's CEO resigned for health reasons last week, just a week into the job. Idearc's shares, which hit $38 last spring, now fetch under $5, valuing the company at less than $1 billion. At issue is whether recent troubles merely reflect a weak economy or a permanent shift by advertisers away from print directories."

GTN: "Gray is highly leveraged with a market cap of $300 million, against debt of $900 million. 'Our stock is extremely undervalued,' says Gray President Bob Prather, who lately bought 11,500 shares in the open market. 'Wall Street is down on Old Media and we've been dragged down by newspapers and radio. TV has some issues, but they're nothing like those industries.' ...If TV can hold its own in the face of the Internet advertising threat, Gray should do well.

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I have been considering following Spekulatius and switching into FCH from AHT. I have been adding to GTN as stock has dropped. With IAR...ouch! I started to buy at $9.27/sh. and have added in $8, $7, $6 range, and yesterday a litte more under $4.

The Barron's article also says this: "We've shown a sampling of levered equities but there are many more out there. Those with market values of more than $5 billion are scarce. Some larger outfits include Hertz Global Holdings (HTZ), Virgin Media (VMED), Rite Aid (RAD), Dean Foods (DF) and Level 3 Communications (LVLT)"

I've sold some RAD as it's moved up from under $2/sh; I've recently looked at DF and decided to pass on that one. I will likely take a few shares of Hertz. I've bought Dollar-Thrifty recently, and given my propensity to buy a package of stocks within a downtrodden sector, I will likely take on a few shares of Hertz too. I like Hertz for its dominance in the sector and for its profitable (I believe) equipment rental business.

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To: Paul Senior who wrote (30200)3/1/2008 11:35:48 AM
From: RockyBalboa
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IAR drew my interest so I looked further. It seems that a whole industry succumbs to new media. The fall of IAR competitor RHD makes me wary and RHD is in a much better shape than IAR.

As you mentioned Hertz, there´s also its large competitor, CAR / Avis which was a part of the old cendant plus budget which they bought out of bankruptcy a few years ago.

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To: RockyBalboa who wrote (30199)3/1/2008 11:39:09 AM
From: Madharry
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re use.de:do you have an analysis of this company you could provide us with a source to find it in english. we all love a bargain but its hard to find sources in english to do due dilligence on foreign companies sometimes. thanks.

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To: Madharry who wrote (30202)3/1/2008 11:42:41 AM
From: RockyBalboa
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As a starter, look here: en.wikipedia.org

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To: Paul Senior who wrote (30200)3/1/2008 1:53:46 PM
From: RockyBalboa
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A more defensive way would be YPG. It suffered recently, also pointing to a slowdown in the business. So far it paid all dividends, amounting to a yield of 10%

finance.yahoo.com

biz.yahoo.com

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To: Paul Senior who wrote (30172)3/1/2008 3:56:42 PM
From: Spekulatius
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SIL, since they appear to have a large derivative position in Silver and Zink, a short position in those metals to presumably offset pricing risk for the mining assets we can only assume that they will show a gigantic loss for the next quarter (silver has almost doubled during the last 2 month). Their mine is not producing much due the water problem (if i remember correctly) that sounds like it will take another 6 month to solve. I wonder if they are still liquid by the time the mine starts. Shareholder equity is already negative and the huge short position at some point will cause margin cause, IMO. And we do not even know if those derivative losses are tax deductable in Bolivia.

SIL will have to raise capital (which is very difficult right now) or sell some ownership in their mine (to Sumitomo, i presume) to stay afloat.

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To: Paul Senior who wrote (30184)3/1/2008 4:12:53 PM
From: Spekulatius
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Hutchison Whampoa is one of the most opaque company i am aware of. it is impossible to determine operating earnings because year after year, investment special dividends etc. gains bury operation results. this year it was the huge windfall from the sale of the Indian cellphone business and some special dividend that accounted for 2/3 of the cash flow. I do know that the Telecom arm generates huge losses and that the property/ports/hotels are nicely profitable. My best guess is that if all special gains are backed out HW is barely, if at all profitable. maybe that's what HW is, a conglomerate that wheels and deals with companies. They seem to have done OK doing this in the past and it may work in the future. But i would not be surprised if one day the whole thing comes tumbling down.

In the current market simplicity trumps complexity. When the going get's tough a lot of people will dump the stuff they do not understand first. HW seems on the wrong side of that equation, IMO.

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To: Spekulatius who wrote (30206)3/1/2008 4:56:58 PM
From: Paul Senior
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HUWHY. If they can turn around their huge telecom investments in 3-G, the stock will do very well imo. They've not been successful though in past three years.

Yes, not possible to understand billionaire Li's balance sheet or his strategies. Or his often gutsy (erratic?) bets. HUWHY is a conglomerate with great assets and lousy earnings visibility.

Reminds me of Berkshire in that there are lots of core assets throwing off cash that the company uses to invest in presumably higher growth areas and industries.

My opinion is that people won't bail from the stock because its complicated financials are anathema in difficult times. My opinion is that people have generally always ignored Hutchinson because of Mr. Li and his complexity. That I suspect (and hope), has made the stock undervalued.

I've been in the stock since '03 with a small add in '04. It's not been a great performer. At current price and with the few shares I hold, I'm willing to add a little more now.

hutchison-whampoa.com

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To: Paul Senior who wrote (30207)3/1/2008 7:57:51 PM
From: RockyBalboa
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HWL acted very nimble in 2000 when they sold their massive stake in German Deutsche Telekom practically at the top (still 6 times todays prices; it was DT who hopelessly overpaid Omnipoint/Voicestream which was co owned by HWL). Actually Orange / Mannesmann / Vodafone was not much different...

Earlier they founded Orange, and they also invested in European 3G like "3".

Hutchinson has actually 5 pillars:

drei.at

drei.at

from "3" homepage, HWL founded it in 2001

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To: Paul Senior who wrote (30194)3/1/2008 11:07:00 PM
From: Jurgis Bekepuris
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BDCs is yet another bunch of companies where you either have to trust the management or you have to diversify like heck. Paul diversifies and what can I say against it. I try to get into "trustworthy" companies, but unlike banks and insurers where you can follow Buffett, here it's my own call and I am not sure it is very good one. :)

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