| From: "Blast
Investor" <blast_investor@blastinvest.com> Date: Thu Jan 29, 2004 10:30 pm Subject: Accumulated LIBHA |
| oI have accumulated
positions in LIBHA (Liberty Homes) between $5 and $5.10 for the past few weeks. The position is relatively small, less that 10% of my total account. My current model portfolio: LIBHA ADGO CHK HCA HRB NEN NTES SOHU. LIBHA is 4-5 year value play LIBHA is a manufactured (or mobile) home builder. Small part of its business is modular homes. Mobile home market has been in bust for last 3 years and LIBHA has negative earning recently. However for past 10 years, LIBHA was quite profitable in boom times. Mobile home Industry The industry is cyclical. LIBHA was trading roughly at current price in 1992 with peak price around $14 in 1997. I expect boom ahead in 4-5 years in mobile home industry. Even though there was tightening of mobile home lending criteria and bancrupcy of large mobile home lender Warren Buffett purchased Clayton Home last year. Reasons for investing into LIBHA: (1) true Net Asset Value is around $11 by my conservative calculation. According to LIBHA company, most of real estate on the book was purchased 30 years ago. 10Q shows the accumulated depreciation of $27, about 40% of them or 11 million are from real estate depreciation. Real Estate do not depreciate its value, it increases value over years. Over last 30 years, real estate has appreciated more than inflation rate of 3%. (2) High insider holding of 62%. No insider selling. (3) Burnrate is low. Currently company lose 1 million per year money excluding dividend and real estate depreciation. (4) US economy recovery will decrease mobile home default rate and attract more banks into this industry. (5) Skyrocketing regular housing price and higher potential interest rate will push more consumers into mobile or modular home market for cheaper price. In fact, modular home market is growing and booming. (6) company is shifting mix into more profitable business: modular and multi-section mobile homes. Earning will improve with better mix of product. I am planning to hold LIBHA for 4-5 years for the turnaround. Reward is about doubling or tripling of current price plus 5% dividend. LIBHA or A shares do not have voting right but have priority of dividend. LIBHB B shares is convertible into A shares with voting right. Conclusion: LIBHA or LIBHB whichever is cheaper is attractive long term value investment for 4-5 year play. This stock has low trading volumn and high bid ask spread, always use limit buy or sell order to trade this stock. ---Blast_Investor http://www.BlastInvest.com/ |