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To: Shane M who wrote (1661)7/13/1999 7:18:00 PM
From: Shane M
   of 4656
 
BTW, I purchased some HMA today.

Oops! Not exactly my best purchase of the year. I should've waited one more day. Stock took a hit today on announcement they'd fall short of street estimates. Maybe I should listen to you guys and stay away from the hospital biz. <g>

Shane

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To: Freedom Fighter who wrote (1663)7/13/1999 7:28:00 PM
From: Shane M
   of 4656
 
***OT***

Wayne,

My main thought on healthcare is that the product is often so complicated that the consumer is unlikely to know what treatment is needed, the alternatives, and how much it should cost.

It's a very difficult situation, but without a 3rd party my guess is that many more consumers would be subject to fraud than the current system provides. It's a difficult egg to crack. It's particularly difficult for free market thinkers because it seems its a clear case of where the market economy is broken and can't function properly without outside assistance.

Shane

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To: Shane M who wrote (1671)7/13/1999 8:27:00 PM
From: Michael Burry
   of 4656
 
So the question is, are you buying more? And Shane, aren't you in
health care?

Mike

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To: Michael Burry who wrote (1673)7/13/1999 9:09:00 PM
From: Shane M
   of 4656
 
Mike,

I haven't decided on whether to average down. I've had a mixed history with averaging down, but the good experiences have occurred when good news seems to be coming out but the market hasn't caught onto the trend yet. I don't think I'll average into HMA until all the "yuck" is out. I'll just sit tight with what I've got and see how the national healthcare debate plays out this time.

I'm in insurance, but the property/casualty kind. I'm a market analyst with Allstate.

Shane

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To: Shane M who wrote (1672)7/13/1999 10:21:00 PM
From: Freedom Fighter
   of 4656
 
Shane,

>>My main thought on healthcare is that the product is often so
complicated that the consumer is unlikely to know what treatment is
needed, the alternatives, and how much it should cost.<<

I feel that way now when I go to the doctor. That's why for a serious problem I would go for a 2nd and 3rd opinion.

My point was mainly one of economics. 3rd parties are basically just "pass through" devices. Premiums, taxes, and debt accumulation are (at least were) raised to meet whatever demand was placed on the 3rd party. So outrageous demands could and were placed on them. The consumer wasn't and still isn't "directly" involved enough with the usual economic choices. This is especially true of government where politics usually comes before economics and sometimes even before the welfare of a misinformed majority.

I think where we might disagree is whether the current problems are really free market based. I think it was interference in the free market that mushroomed an existing problem.

Just to be clear though, I totally understand all the problems the poor and elderly have in getting health care. I also agree that we would have some fraud and corruption no matter which system we used. My experience just tells me that you can address small problems with small solutions. We have had a way of turning small problems into enormous ones by turning them over to government.

Wayne

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To: Shane M who wrote (1674)7/14/1999 1:04:00 PM
From: Freedom Fighter
   of 4656
 
Shane,

What do you think of Allstate as an investment?

Wayne

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To: Freedom Fighter who wrote (1676)7/14/1999 3:26:00 PM
From: Michael Burry
   of 4656
 
Been looking at Reuters (RTRSY) for quite a while. Getting more and more tempted as time goes on and the potential value of their substantial assets becomes more and more awe-inspiring. Always limited though by the "when" - as in "when will these assets actually conspire to spur significant growth? "

Today, they IPO'd a portion of their business that is growing like gangbusters, TIBCO (you'll see it at the bottom of the Yahoo Quote pages). The market gave TIBCO a valuation of 2B right out of the gate. The idea is that they could have 5B in revenues in a few years. Cisco has a sizable stake, as does the Mayfield Fund. Reuters still owns 63% of it.

The company has been earning between 39-78% on equity over the last 11 years, and return on net tangible assets has ranged from 37-57% over the same time. No significant debt. Tremendous distribution lines and brand recognition. Trades today at 30 times earnings, with little good growth over the last few years, and no analysts rating it a strong buy. They have been set back as the internet proliferated, but it seems to me they are in as good a shape as anyone to ultimately benefit from it. As earth's biggest financial info provider, the extended trading hours and Asia's rebound both are neglected potential catalysts to the stock price. The Capital Group is a big shareholder.

The stock has doubled since last year, but has been basing between 80-100 during 1999, and at my buy price of 81 1/4, traded for less than 15% above its mid 1996 price. My feeling is the stock is poised for continued rebound, the current neglect of the stock is an opportunity, and that it qualifies as a Buffett-like stock.

And yes, dumped Philip Morris to buy it. I'm envisioning a nightmare situation where the rest of the world gets lawsuit-happy. I don't feel it is justified, but saw a more certain opportunity in Reuters.

Mike

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To: Michael Burry who wrote (1677)7/14/1999 4:16:00 PM
From: Freedom Fighter
   of 4656
 
Mike,

You're touching on a very sore spot with me here. I bought RTRSY in the 50's in the middle of 1997. It immediately ran up to about 70+.

A few months later there was a NY Times article about potential theft of Bloomberg proprietary information that included a big investigation and lawsuit. I couldn't quantify either the financial or business risk.

I sold the stock at a reasonable capital gain plus a cash distribution. (When I bought they had a ton of excess cash on the balance sheet that they decided to pay out).

The controversy then just faded and I still have no idea what's going on. The stock, of course, has done well since my sale and was an enormous bargain in between.

Rats! Double Rats!

I agree with you about the qualities of the company. There's a ton of
things to like. When I first bought in I thought I was stealing.

Wayne

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To: Freedom Fighter who wrote (1676)7/14/1999 8:32:00 PM
From: Shane M
   of 4656
 
Wayne,

I posted a summary of my thoughts on ALL on the Value thread a few months ago. You might search SI on that thread for Allstate and see what you can find. Through my 401k matching my Allstate shares may make it my single largest equity holding.

Basically, I still wouldn't buy at present. The long term picture is extremely cloudy. I think there are alot of people in the company are working extremely hard to make the most out of the agency channel of distribution, but it's an uphill battle. Direct distribution models are gaining popularity, and we have a major channel conflict problem. How do we address the growing demand for the Direct channel without upsetting the existing agency force? It's very similar to the problem that Merrill Lynch faced with existing brokers, vs. popularity of online trading medium.

Shane

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To: Shane M who wrote (1679)7/15/1999 12:32:00 PM
From: Freedom Fighter
   of 4656
 
Shane,

Thanks. I agree. Do you have any special insights into Mercury General(MCY)? I own a position. I bought it a little bit below where it's trading now.

Wayne

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