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MUTUAL SERIES FUNDS'
MICHAEL PRICE ET AL.
(continued from preceding
page)
Dunlap's been very successful - very effective. He's worked for some of the toughest guys in the world - like Kerry Packer and Rupert Murdoch and Jimmy Goldsmith. The guy's been around. And he knows how to do the job.
Under Dunlap, Sunbeam's EPS (and stock price) will rise.
Price: And that's why the stock went from $14 when
it was announced to $19 and has climbed to $24 [since]. I
think it's maybe a little ahead of itself, but not that much.
It never should have been $12 or $14 before. It was
probably a $16 or $17 stock. But - and this is the key -
the right management is very important.
[Therefore], I think the way to look at Sunbeam is not
to look back at the price that its stock was trading at right
before Al Dunlap came on, $12 or $14, but [rather to] look
back to what it was earning a year prior to that - which was
$1.05 - and figure Al Dunlap should get that $1.05 to $2.00
and that the P/E multiple for these things are 19. So we
think that stock could be a mid-$30s or upper $30s stock
a year from now once his plans have been implemented.
- AS ARE TOBACCOS, WE THINK.
ITT is a good value - whether it's realized soon or not. A universal settlement would push tobaccos much higher.
Page 9 of 28
Shareholder: You indicated that you were buying two
of the three pieces of ITT. Do you
have any further comments?
Price: Well, ITT split
up into three companies: (1)
Hartford Insurance; (2)
ITT Industries - which is largely, I
think, some defense, electronics and auto businesses, and
(3) ITT Corp., which Rand Araskog
runs, which owns gambling, Caesar's World, Madison Square Garden, the
Knicks and the Rangers (which might be reasons to buy it
or not buy it), and Sheraton, the St. Regis, the CIGA chain
and MSG Network.
The stock started trading in the upper-$40s, moved
up to $63 - and today it's $42. I think the values within
ITT are higher than where the stock's trading. But I also
think that not much is gonna happen to bring them out
any time soon. It's a good value. But I don't think it's the
best way that company should be structured....
Shareholder: At June 30th, we owned quite a bit of
RJR and a big chunk of
Philip Morris. The tobacco industry
has gone through such turmoil over the last 4 or 5 months.
Have we lowered our position somewhat?
Price: Yeah. The
RJR position's been cut in half.
And the Philip Morris is gone.
They're real tough stocks to trade. But they are cheap. They're cheap any way that you
look at 'em.
But it's very hard to quantify what their liabilities
could be. There is pressure on the managements to settle
for 15 or 20 years of future suits. And if there were ever a
universal settlement, these stocks would both be
15 | 16 | 17 | 18 | 19 | 20 | 21 | 22 | 23 | 24 | 25 | 26 | 27 | 28
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