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Corrections Corporation of America Message Board

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  • joepalookaboggs joepalookaboggs May 22, 1999 5:10 PM Flag

    The good news is ......

    Where would we be without Barron's, that
    prescient weekly that has led us into many an ambush, and
    prompted me to sell some stocks way too soon. I look back
    and remember their bearish stories on Microsoft a few
    years ago, their pounding the table on MA/Com just
    before it went into the toilet, their touting of (the
    late) Penril which cost me more than a few bucks, and,
    oh yes, they even warned that Anheuser Busch (BUD)
    looked a little toppy a little over a week ago. Got a
    few profitable trades as people dumped the stock down
    to 68, only to have it recover to 76. These days, I
    almost regard Barron's as a contrary indicator. If they
    are pessimistic on PZN, that can't be too bad.

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    • as this board. Nothing new except what I thought
      as somewhat postive, that with all this fiasco
      they're only looking at 9.75% or up 1/4-1/2% on the bond
      issue. Certainly not good but better then I was fearing.

      • 2 Replies to flipper_58
      • But I was informed CCA would have NOT been an
        investment grade credit. We have 2 offsetting factors, the
        larger BV verses no retained earings. I don't which more
        beneificial for credit buyers. CCA of course was trading at 5
        times book value. PZn is now trading less then the
        construction of it's prisons. (47k*$39,000/bed) Even Paine
        Webber estimates, the construction cost of a bed is in
        the $35-40k range last time I read a report talking
        about this.

      • If history is any guide, the stock price will
        move up Monday just like is has every time a negative
        report hits the mainstream press. Why is this? My guess
        is that just like the 60 Minutes piece, there is
        nothing in there that current PZN shareholders don't
        already know. No existing PZN shareholder will sell
        becauseof this article. On the positive side, the article
        sparks some interest from potential bottom-fishers. Just
        my theory though.

        To Barron's credit, I
        thought the article was fairly well written. Yes, they
        cite Analysts who are concerned about "another shoe"
        and are pissed at management. The article did point
        out "former" shareholders. Well, I would expect
        former shareholders would have this concern; that's why
        they are former.

        I suppose the article could
        have been more balanced and pointed out that despite
        the short-term challenges, business is absolutely
        booming both in terms of quantity and high-margin
        business even if the bond carries a higher rate. But
        regular Barron's readers know that's not their style.


        Net-net, personally I found it comforting that even a
        critic said the dividend would be earned next year.
        Granted, they are coming up a little short of earning the
        dividend this year but at least they are savvy enough to
        know that from a PR standpoint they can't cut the
        dividend.

        Basically, I bought a stock on Friday at 13 3/4 that even
        the critics agree will make and pay at least $2.20 a
        share next year. Wish I hadn't bought those shares at
        23 but if I look at the yield on my weighted-average
        shares, I like what I see.

        Cleo, notwithstanding
        Flipper's usually reliable contacts, I find it difficult to
        believe that CCA's bond rating wouldn't be on the low end
        of investment grade. Even the agencies cited the 95%
        payout requirement as a concern/negative. That
        particular argument seems like a tough one to make but its
        also an argument that doesn't really matter because
        what's done is done.

        Since I'm posting anyway,
        I'll repeat my contention that management open up
        OPCO's books. The upside is we assuage some of the very
        real concerns out there. I must be missing something
        because assuming everything IS on the up and up, I don't
        see any downside for PZN or CCA.

        Flip, MK,
        General, Nic - please tell me what I'm missing here.

 
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