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Corrections Corporation of America Message Board

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  • tmacker tmacker Jun 2, 1999 1:01 PM Flag

    FEDERAL BUREAU OF PRISONS HAS

    I'll start by assuming you are a reasonable and
    intelligent investor. Just for my own 'peace of mind'. You
    certainly understand risk/reward, and probably know about
    'Beta' risk ratings. You will have, of course, carefully
    read background information before investing in this
    speculative stock, possibly even (is it possible?) the
    prospectus.

    If 'peace of mind' was a high priority, your
    investment advisor was remiss in not suggesting zero-coupon
    treasury bills, or some such widows-and-orphans
    approach.

    But hold! I do not mean to impugn your character by
    daring to suggest a lack of either courage or good
    sense! Please consider the following:

    Unlike
    'conventional' REITS, PZN's fundamental underlying value is tied
    up in a particularly illiquid sort of Real Estate,
    with especially limited resale value. Having owned and
    followed several other REIT investments for years now,
    like BRI, NNN, and MTH, I must admit I came to my
    investment in PZN with several serious misconceptions.
    Reasoning by analogy can be expensive.

    I have come
    to believe that the real value in PZN is represented
    by less tangible and unpredictable assets: the
    company's ability to generate revenue by retaining and
    increasing its contractual revenue streams. The good news is
    that, in its specialized field, there is a strong
    'ratchet' effect: once a 'customer' is brought on board,
    they are far more likely than not to stay a customer:
    renewing contracts, even at carefully calculated
    'enhanced' prices, over time, will be far less costly than
    building alternative facilities, or leasing them from a
    competitor. Being brave enough to build 'on spec' is a risk,
    but fortune favors the bold.

    in (again) at 11
    15/16, and waiting for 6/18...

 
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