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Corrections Corporation of America Message Board

  • flipper_58 flipper_58 Mar 25, 1999 1:24 PM Flag

    Value verses Momentum Investing...JMHO

    Momentum investing means "buy high, sell higher".
    A fun game and one that's worked well as the
    liquidity factors mean you don't need to worry about
    valuations. You just need to worry about
    liquidity.

    Value Investing means "buy low and sell high". Not in
    favor now.

    Here's more PZN numbers to absorb in
    your decision process.

    The highs, lows and
    current numbers in the following ratios since PZN's
    inception.

    P/E 7 - 26 Present 7.7
    Price to Book .6 - 1.9
    Present .7
    Price to Cash Flow 6.8 - 25.4 Present 7.7

    Price to Sales 4.7 - 34.3 Present 24.47

    How do
    you define low?
    IMO...if you can buy a company for
    20% down with the rest at 9% debt and clearly make
    money...that's the low.

    110M shares out@$17.50=$1.925B
    price tag.
    20%equity down=$385MM with $1.54B in
    debt.
    Annual debt service=$139MM
    Net revenue @$2.50
    share=$275MM

    Your ROI on you $385MM investment=35%/year
    min.($275MM-debt service of $139MM).

    SortNewest  |  Oldest  |  Most Replied Expand all replies
    • Flipper
      I have some problem with the
      arithmetic in your posting
      "P/E 7 - 26 Present 7.7

      Price to Cash Flow 6.8 - 25.4 Present 7.7
      Price to
      Sales 4.7 - 34.3 Present 24.47 "
      If I calculate it
      correctly this business margins are north of 300%.
      Microsoft margins pale comparativly. Am I missing
      someting?

      PS I wrote similar message before and I thought that
      I posted it. I looked for it and could not find it.
      If it shows up twice ingore one of them

    • Flipper I have some problem with the arithmetic.
      How can cash flow and earning be higher than sales?
      Earnings are sales minus all cost of sales, expenses,
      interest and taxes. In any normal business a person that
      comes up with such a creative accounting would be a
      guest at their facility instead working for them.

    • This is an old adage that I used to tell my sons
      constantly. Unfortunately, I had forgotten what I told them
      when I bought my last 1k shares of PZN @20 3/16. The
      facts are all on the side of PZN when it comes to
      evaluating it as a good investment. Unfortunately, attitudes
      seem to be totally turned in the other direction. As a
      stockholder, I'm very much for PZN investing some money to
      improve it's image with investors. If the facts are
      straight about the value of PZN as an investment, then the
      problem is definitely investor attitude. I believe that
      PZN has a good story to tell and I hope they will
      begin to tell it.

 
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