Subj: Cars are faster soon they will find
Date: 6/16/99 9:57
"...ultimately Bloomberg does not own one share of TDW. Just
wait till the Chinese park their bikes and find out
that cars are faster."
There really are some good quality postings here.
There appears to be a very good understanding of the
industry dynamics which are more important at this time
than stock market fundamentals. I am into TDW for the
long term and like most of you do not see day rates
improving in the short term. I would expect earnings to
continue to decrease over the next year unless of course
TDW are able to consolidate the market considerably.
Some talk of rising gas demand in the US may have some
effect on day rates towards the early part of next year
however there is an over supply of vessels that need to
be worked out of the system.
With the Market nearing the top and PEs at all
time highs, one must find stocks that is undervalued
and still growing very fast.
Jan-Bell is such
a company -
JBM retails fine jewelry and Rolex
watches like Tiffany & Company. However, JBM is growing
at 60-70%, much faster than it's peers like Gucci
What's more Jan-Bell has been buying
back aggressively, $15 million stock buyback at the
current price is equivalent to 1/3 it's
Next year JBM is projected to make at least $.69 per
share, giving it a PE of 4 and a book value of $5.77 at
the current price.
JBM is also selling very
well over the internet through VUSA, ShopNow.com, IMAL
and JBM's Mayor's
In this industry, the stock price drops about 9
months to 12 months prior to the peak in earnings and
the stock price will begin to rise 9 to 12 months
prior to the recovery. If you wait for the actual
reversal in earnings you will miss most of the rise.
This stock hit its high in October 1997 and declined
from that point. But earnings continued to rise for 3
quarters after that.
The high point in the stock is
not at the same time as the high point in earnings.
And the low point in the stock isnt at the low point
in the earnings.
TDW has the "Potential"
with its existing fleet and capital structure, to earn
over $5.00 per share when the oil market fully
recovers, assuming it gets back to the conditions 2 years
TDW peaked at over $70 in late 1997.
you're right; we probably do have different
philosophies. I could go on for a bit about the demonstrated
track record of contrarian investing, but I'll save
that for another time.
I will say that if you
want to buy low and sell high, you first have to be
ready to buy when prices are low. But aren't prices low
particularly because the "consensus" about the company is
bad?? Otherwise, the price wouldn't be low. So when I
see a company like TDW that is this cheap, is a
leader in its industry and is a dominant player in its
market, is continuing to make money despite dreadful
market conditions, and has the financial strength of
TDW, I'm "all over it" (as my daughter would put
In these types of situations, maybe the stock
doesn't go anywhere for awhile, but often it does. In
general, the stock begins rallying before there is any
real apparent reason, or when the change in prospects
still seeems ephemeral. When it is clear that the
company's prospects have changed, you can easily have
missed out on 50% or more of price rise in a short term
- that initial turnaround is often the fastest and
most dramatic part of the share price
So when I identify a situation such as TDW I move in
and take a position. BTW, I opened my current
position in TDW Feb 9 - I'm up 35% already, and I think
we've only just begun.
I do have detailed knowledge of the industry and
that's why it's hard for me to understand. TDW is a very
well managed company and obviously the cream of the
crop of OSV operators. I have great expectations for
the stock and for the company.
I guess my
investment philosophy is a bit different than yours. TDW is
certainly a value at today's price but I can not see tying
up my money waiting on the twelve-month lag in OSV
rates v price per bbl of oil to drive the earnings back
to early 1998 levels. I do plan to buy TDW, but
later this year. Perhaps I will leave some money on the
table. Perhaps I won't.
I think the items you mentioned were already
recognized and reflected in the share price - so that's
shrugged off. What is more to the point - for a contrarian
investor - is that if little is expected of a stock, there
is great opportunity to exceed expectations.
Conversely, a high flier of whom much is expected, has much
greater room to fall below expectations.
TDW is a
great, contrarian value play. There is a strong
likelihood that there may be something good news in the
offing - I leave that speculation to the board
contributors who have detailed knowledge of the industry.