Audio Archives
Client Letters
OID Features Online
OID.com Exclusive
Features
Indexes:
Investors
Funds et al.
Companies &
Investments
Contact Us
About Your
User Name
& Password
Free Reprint
Online Excerpts
Investors in
Our Latest Edition
Companies &
Investments in
Our Latest Edition
About OID
Subscribe
Online Advertising
Online Classifieds
Employment
Opportunities
Portfolio Reports
Home Page
SOGEN FUNDS'
JEAN-MARIE EVEILLARD ET AL.
(continued from preceding
page)
And in 1996, they invested in the corrugated board division by buying a new machine for one of their plants - and making a small acquisition in Italy which also increased their corrugated board capacity.
OID: This business sounds like it sucks up capital like a black hole and that the sucking never ends.
Tobin: As long as they earn the kind of returns that we think they can on that capital, we're happy to see them put more capital into that business.
But they're not going to earn those returns this year. In fact, they'll be lucky if they can be flat with last year because of vicious competition in the corrugated board division. But over an average cycle, l think so.
OID: Vicious competition seems to be the norm here.
Tobin: I think that's right. That's why the quality of management is so important in this business.
Eveillard: And the vicious competition is, of course, at its worst near the bottom of the cycle - which is pretty much where we are today. But looking out past the bottom of the cycle, l think we'll be fine.
[Editor's note: Tobin tells us a corporate tax increase in France - probably a sizeable one - is in store. If so, Emin Leydier's earnings and returns could take a haircut of 10% or so - at least for a couple of years - which was factored into the 1997 estimates.]
BUT WINTERS ALREADY LAID OUT THE CASE.
Eveillard: But if it's less competition that you want, then maybe we should talk about Telegraaf.
OID: At the very least, we should take the opportunity to point out that you told us about Telegraaf first - even before Tom Russo.
Eveillard: I talked very briefly about it.
[Editor's note: See our February 8, 1990 edition.]
OID: And, incredibly, at that time, you mentioned that it was selling at only 6-8 times earnings!
Eveillard: Actually 6-8 times reported earnings. And I didn't really elaborate on it at that time. But if you made the adjustments David Winters made [in your December 31st edition] which reduce its P/E from 16-17 times reported earnings to a single-digit multiple of adjusted earnings, who knows how low it would have been then.
As Winters laid it out, at 16-18 times earnings,
Page 19 of 20
|
(Return to Table of Contents) |
(continue to the next page) |
©Copyright 1996-2008 Outstanding Investor Digest, Inc. All rights reserved.
295 Greenwich St., Box 282, New York, NY 10007 (212) 925-3885