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National Presto Industries Inc. Message Board

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  • pmlljl pmlljl Apr 9, 2005 5:31 PM Flag

    Salton

    no slappz: I did not mean to imply that companies bought out of bankruptcy are never any good. It is just that they are usually full of problems. The worst of which is that frequently the court excuses their debt but allows the same managers that piloted them into bankruptcy to continue to manage them when they emerge from administration. This clearly isn't fair. In many cases these kinds of people should not get another opportunity to lose more money. In recent years there have been increasing numbers of companies filing for chapter 22-that is, consecutive chapter elevens. I have no argument with giving KMART or MCI another chance, I am just astonished that investors don't say "show me" before they bid the stock prices way up.

    I don't think you quite understand my reference to the "future". Let me use two examples. Please look at the financial statements on Yahoo for CVC and NTN. Here are two companies that have lost money almost every year for decades.

    CVC has a retained deficit of about $3,500,000,000. Its liabilities exceed its assets. It reports goodwill and other intangible assets of about $3 billion despite the fact that it never makes money. The cable tv business has convinced wall street that it is "special". That is, it will make money in the "future" once it gets past its front loaded capital costs. The problem is, that for them, the future never comes. They would tell you that they just need a little more time. Those are the first words out of any con-mans mouth. Yet Wall Street bought it and continues to buy it just like they bought the dot-com nonsense when the companies didn't even have businesses.

    What I am railing against is belief in ideas despite the fact that time and experience has proven they are not correct. If investors would just open their eyes and use their heads instead of following the managements and promoters of these companies. These guys usually are infected with the Trump-Posner gene in a major way.

    NTN is the trivia game company. Like CVC it has never paid a dividend to my knowledge. I think it has been around for about 30 years and I doubt if it has ever made a profit. Unlike NPK it has accumulated about $90 million in deficits. Like Playboy, every now and then it will sell more stock or debt so that it will be able to fund its future losses. Surely the buyers, whose money is going to be lost, believe in the future. Despite the fact that current shareholders get no dividends and that the company makes no money they all believe that the future is golden and that there will be jam for everyone. The market says NTN is worth about $168 million and it values NPK at $275 million. I know which one I would pick between these two but I admit my crystal ball is hazy.

 
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