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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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To: hoyasaxa who wrote (1726)8/11/1999 7:49:00 PM
From: Michael Burry
   of 4661
 
The interesting thing is pharms have outperformed over the last 10 years thanks as much to multiple expansion as earnings expansion. We're talking multiples 2-3X historical norms. Now comes Medicare and the issue of lawsuits. AHP's potential liability here is simply staggering. I'm just expecting some multiple contraction to recognize this.

Mike

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To: Michael Burry who wrote (1727)8/12/1999 12:46:00 AM
From: James Clarke
   of 4661
 
Agree on AHP - they've got a BIG problem here and it is going to get bigger. I hear that these diet drugs are the prime target for the extortionist lawyers bankrolled by the tobacco industry. "Corporate greed" my %&#$. But what does that have to do with my plan to buy Merck at 50 in a market meltdown? I see no reason to generalize across the industry. Yes, I agree they got way overvalued, but have come down signifantly already. Not quite at my price yet, but getting closer by the day.

JJC

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To: James Clarke who wrote (1728)8/13/1999 2:51:00 PM
From: Freedom Fighter
   of 4661
 
I picked up some shares of Flowers Industries (FLO) over the last 2 days. Their 55% stake in Keebler is worth about $13 per share. That means the rest of the business is selling for $2-$3. It's hard to place an exact number on the remainder because there's so much restructuring, upgrading and reorganization going on, but it looks like they're giving it away. There's some good brands there.

Wayne
members.aol.com

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To: Freedom Fighter who wrote (1729)8/13/1999 3:42:00 PM
From: Michael Burry
   of 4661
 
Me too. Got mine today at 15 3/4. If anyone doubts Keebler or Mrs. Smith's will be around in 20 years...

Backing out non-cash and interest expense, I see them earning over 20% on capital in a down year. The story makes sense to me: capital and information age improvements expensive now, but improved distribution and profitability later. Feels like no one's looking as I steal this.

The debt probably would rule it out for Buffett, but they could pay it down rapidly if they wish. As far as I'm concerned, they don't have to.

Mike

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To: Michael Burry who wrote (1730)8/13/1999 3:48:00 PM
From: Freedom Fighter
   of 4661
 
Mike,

Glad to here it, partner! I agree completely.

Wayne

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To: Freedom Fighter who wrote (1731)8/13/1999 3:57:00 PM
From: Michael Burry
   of 4661
 
FWIW, after all my hootin' and hollerin', I did buy back into Mattel as well at sub-22 prices today. Traded that one 22 to higher twenties. Then made a big stink about the return on capital. And now I've reconsidered. I see this as low risk thanks to the brand names, the earnings way understating cash flow, and the low it tested for the second time less than a point south of here. I also read a little snipped about Mattel in ComputerWOrld that leads me to believe they do really get where the business of toys is headed. Would I sell if it breaks 20? I'd consider it.

Mike

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To: James Clarke who wrote (1722)8/14/1999 1:04:00 AM
From: jhg_in_kc
   of 4661
 
BUFFETT has said quarterly earnings reports are irrelevant. But now that I think about it, what the hell is relevant? A CD in Westport Bank in Kansas City, Mo paid more than Buffett
THE TRUTH IS WHAT BUFFETT NEEDS IS A TERRIBLE BEAR MARKET, SO HE CAN FIND HIS GREAT FINDS. ARE YOU WILLING TO LOAN HIM YOUR MONEY UNTIL THEN.
WHAT HE IS DOING IS SELLING INSURANCE. SEND ME YOUR MONEY NOW WHEN TIMES ARE GOOD, I WILL REWARD YOU WHEN TIMES ARE BAD....
Any thoughts, as Berkshire languishes....?

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