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Strategies & Market Trends : Buffettology -- Ignore unavailable to you. Want to Upgrade?

To: Freedom Fighter who wrote (1676)7/14/1999 3:26:00 PM
From: Michael Burry  Read Replies (1) | Respond to of 4657
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.


To: Freedom Fighter who wrote (1676)7/14/1999 8:32:00 PM
From: Shane M  Read Replies (1) | Respond to of 4657

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.