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TD Ameritrade Holding Corporation Message Board

  • FinSvcsInc5 FinSvcsInc5 Oct 5, 1998 1:00 PM Flag

    FINANCIAL DATA INQUIRY

    'm wondering if anyone is familiar with a company
    called Lazare Kaplan (LKI). The 10Q indicates that the
    company sells diamonds and has about $11 per share book
    value, consisting mostly of diamonds carried at cost.
    The balance sheet looks real good. They seem to have
    recently reached some very favorable deals and will maybe
    earn $2 per share next year. The stock is at a low of
    around $7-8.

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    • I did look at LKI about a year ago, after they
      have been suggested by some analyst on CNN. I am glad
      that I did not, considering their stock's performance.
      Cannot recall exactly why I decided not to go with them
      except for one general comment - in my perception the
      days of making lots of money on commodities are over.
      Both gold and diamonds have very little intrinsic
      value and even their perceived value have suffered over
      the last decade. With silver you have a demand factor
      now outstripping supply (remember, that is why Buffet
      put a ton of money in that a while ago), but as far
      as gold or diamonds are concerned, just the opposite
      is true.

      The book value of the company that
      you are talking about is mostly based on the average
      cost of the diamonds in stock - but that is only
      meaningful in the context of De Beers controlling the world
      supply of diamonds. For their own interest, other
      diamond sources are pretty much willing to play within
      the framework of the De Beers cartel, as this keeps
      the price of diamonds artificially high.

      I
      cannot see how this will continue much longer. The real
      value today lies in the deployment of knowledge, not in
      something as tangible as some alloy or metal, or even corn
      or coffee. About 6 months ago I gambled and switched
      all my investments to High Tech stocks, mainly
      successful Internet companies. I am sure happy that I did,
      considering that my Internet holdings have fared much, much
      better during the market rout that we are
      experiencing.

      Hope this is helpful, even if I rambled too
      much.

      Good luck!

 
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