There's a lot to like….
    Hawkins: The company has the best landfill and collection assets in the industry - virtually impossible to replicate in today's environmentally conscious society.
    Waste Management is the dominant operator in almost all its regional markets. The industry's economics are improving as supply remains relatively limited and demand continues to grow. The industry has become an oligopoly of sorts with most markets having only one primary competitor, therefore creating what we consider to be an environment for firm pricing.
    Significant cost and revenue opportunities remain from the merger of the old Waste Management with the USA Waste Company. We think the net cash earnings of Waste Management over the next 12 months will be about $2.50 per share and that the free cash flow per share can exceed $4.50 sometime in the next three years.

And its problems are both fixable and short term in nature.
    Hawkins: Two problems remain: Its board is currently trying to find the kind of CEO who'll be able to capture these revenue and cost opportunities. And we think they're being very diligent in this process and that shortly we'll find out that we have a very capable manager who will not only operate intelligently, but also invest our free cash wisely.

    [Editor's note: Maurice Myers, the former chairman of Yellow Corp. (the parent of trucking company Yellow Freight) has been named the new CEO of Waste Management - their sixth since May 1996.]

    The second problem is one that relates to accounting and MIS [management and information systems]. That problem also is both fixable and short term in nature. And we believe the company is making good progress there given its announcement to bring in the individual from Perot Systems who was responsible for the GM conversion to an up-to-date MIS system.
    So to date, [although] our performance has been affected by the decline of Waste Management, we've used that decline to our advantage to build our position. Problems remain to be addressed - both at the management level and at the accounting and systems level. However, we believe that both of those issues will be resolved in short order - and that the company can then go on the offensive to building even more value per share for us as long-term owners.

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