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To: Shane M who wrote (1715)8/1/1999 9:55:00 PM
From: James Clarke
   of 4661
 
Have to sell a large mutual fund holding of my mother's and just want to slip in into some quality and reasonably valued stocks that she can hold for a while. I'm splitting it roughly equally into these six. I think two of them are Buffett companies and the other four are in the next zip code. In terms of value, forgetting where the market trades, I would say Clayton is a steal, Ambak, Crane and Disney are on the cheap side, and other two are just companies I want her to own that are reasonably valued.

Berkshire Hathaway
Ambak
Disney
Crane
Clayton Homes
General Mills

I know, Disney I said just a week ago is a few bucks off. But part of that might be a market call (see recent Value Investing Thread posts). For money I have to invest now, Disney makes more sense at 27 than most any other business of its quality at the current price.

I was convinced today when reading a Buffett book and I found this quote about why Disney is such a great business. Concerning Mickey Mouse - "The nice thing about the mouse is that he doesn't have an agent. You own the mouse. He's yours." What a wonderful business. They can reissue the classics every seven years or so. "Owning Snow White is like owning an oil field. You pump it out and sell it and then it seeps back in again." And then I thought about my own experience. My first baby is due in two weeks and my mother had a whole bunch of my old toys, and a bunch of videos ready for when the baby comes to her house. Virtually all the toys are one of two companies - Mattel or Lego. (I guess I didn't like Hasbro as a kid any more than I like it as an investor.) And the videos are 100% Disney. She already owns Mattel, so now she'll own Disney too.

I think she will be happier with these in ten years than with the mutual fund her broker sold her when I wasn't watching. It charges a 2% expense ratio to own what looks to me like the most popular stocks in the S&P, but somehow trails the index by 3-10% a year. I guess they buy them when they're popular and sell them when they're not - turnover of 130% a year!

Hopefully some food for thought. A few new names.

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To: James Clarke who wrote (1717)8/2/1999 1:06:00 AM
From: Michael Burry
   of 4661
 
I don't know that I like Disney's internet actions. And if you don't like management, I wonder how safe Disney is. I mean, you are counting on them to develop an internet property correctly. I never use the GO network. Are they developing a sinkhole to counteract the cash flow of their real franchises? And do their real franchises grow anymore at anything greater than the rate of inflation? I mean, electronica/internetica is taking dollars from somewhere among the 4-12 year olds.

Clayton is the lone stock in its sector not yet crushed by any disaster. I don't know what is holding it up. But when it's raining stones, I don't expect even Clayton's umbrella to hold up. We'll see.

Mike

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To: Michael Burry who wrote (1718)8/2/1999 1:19:00 AM
From: James Clarke
   of 4661
 
Disney was one of the Master's seven largest positions at year end '98. Maybe he sold it - I doubt it. By definition that makes it a Buffett stock. And as you have told me every time I cringe at one of yours, if everybody loves it, it ain't cheap. That's why the one I hesitated the most about was Berkshire.

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To: James Clarke who wrote (1719)8/3/1999 11:05:00 PM
From: jhg_in_kc
   of 4661
 
How about putting mom in a little AOL at 45% off, or RMBS, whose bus will leave the station on Sep. 5 .LET'S ROCK AND ROLL. BABY. OH BEHAVE! (allusion to Austin Powers)
jhg

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To: jhg_in_kc who wrote (1720)8/3/1999 11:30:00 PM
From: Michael Burry
   of 4661
 
A lot of us missed the AOL train, which left at a price of 15, not 88.

Mike

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To: jhg_in_kc who wrote (1720)8/4/1999 12:50:00 AM
From: James Clarke
   of 4661
 
<<How about putting mom in a little AOL at 45% off, or RMBS, whose bus will leave the station on Sep. 5 .>>

I thought about AOL, but decided that short-selling is a little too aggressive for my mother's retirement money. Or did you really think I would BUY a stock at 150 times earnings, where 27 out of 27 sellside analysts have buys on it and insiders are selling to the tune of $200 million? Let me give that some thought...no. Maybe at 30.

JJC

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To: James Clarke who wrote (1722)8/7/1999 10:55:00 AM
From: Michael & B.Anne
   of 4661
 
re AOL

There is a story in the "Right Stuff" (story of the
test pilots who went into the space program) by Tom Wolf
about a pilot who flew his plane directly into the ground
while looking at his instruments that said he was doing fine.
He found no sympathy with other pilots who derided him for
"not looking out the window."

AOL has such major problems

1) MSFT and ATT have combined to attempt to make the
household entry point cable with a proprietary cable modem.
ATT has come close to betting their company on this and it
is not a bad strategy. Further the strategy is to preclude others
(read AOL) from having access. If AOL is unsuccessful at gaining
legal redress - they could be history. And ATT is a master! at
such political infighting with special entrenchment in the communications
portions of government.

2) MSFT just announced the intention of offering ISP
services for FREE. Sounds familiar, remember when MSFT
wanted to be a browser provider despite the fact that
Netscape had nearly all the market. And where is Netscape
now (and how has it aided AOL in any manner.) If
MSFT is in anyway successful AOL's current problems with
inability to expand user base will get worse.

3) AOL provides an inferior service - much slower with
screens filled with banner ads. Further sailing into
the wind with keywords vs normal internet URL's (you
must use AOL unique procedures to reach sites that
give their address in URL formats.) And this can only
get worse - suppose that AOL is allowed to access through
pending cable modems, they will have to layer on top
of protocols with conversion routines that must be slaved
to ATT/MSFT base. Does anyone remember when IBM was king
and how they controlled the computer market by controlling
the access through ports.

In sum, AOL is such risk of being a technology loser and
this is never discussed - everyone seems to only focus on
the marketing and market meters on the instrument panel
.. no one is looking out the window.

Regards

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To: Michael & B.Anne who wrote (1723)8/10/1999 8:52:00 PM
From: jhg_in_kc
   of 4661
 
This really should be on the AOL thread, but two points: MSFT has "backed off" its rumored free ISP offer and T, says the NYTimes, is contemplating spinning off Excite, reducing ATHM to a "dumb pipe" and making AOL its portal, or start page on T cable lines. T denies this but not too convincingly.
That said, I am not as happy with my AOL investment as I was when I bought some at a split adjusted 24 last Nov. (I also bought some around 130) But this stock is like Bill Clinton; it keeps reinventing itself or maybe like nixon, a survivor of crises.
jhg

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To: James Clarke who wrote (1722)8/11/1999 1:32:00 PM
From: Michael Burry
   of 4661
 
Pharms are often thought of as Buffett-like companies. Yet watch American Home make like Big Tobacco as it now denies the evidence and the fact that its product caused a lot of morbidity. The liability around this is potentially huge. I now look at AHP as like MO. Unknown liability, unknown valuation. Should all the pharms be thought of this way? And if so, don't they deserve a PE of 15-20 rather than 35-40? There is a huge potential off-balance sheet liability waiting to happen with each pharm, and I feel it is important to recognize this. Pharms have been taken off my "Buffett" watch list.

Mike

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To: Michael Burry who wrote (1725)8/11/1999 3:24:00 PM
From: hoyasaxa
   of 4661
 
Disagree. Believe the pharms have more retrun potential then their liabilties have disaster potential. AHP and MO, BTW are steals at these levels IMO. Value their legal liabilities as out of the money options, or as the overhang of a convert and perhaps you'll agree as their EBITDA outpaces the potential for ill, and high ROEs continue....

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