Monday, April 25, 2005

Private Values

Omnicell is roger King's kind of stock. In barely a year the medical information company has let down WallStreet with its quarterly earnings and seen its market value shrivel 68% to $173 million. But King, comanager of the Fountainhead Special Value Fund, believes Omnicell could be worth $300 million and that one day the company will prove it.

"Omnicell will make it on its own," says the 62-year-old Houstonian, "or somebody's going to put it under their umbrella."

After 36 years in the investing business King has settled on several ways to root out stock bargains. His favorite among them is to find stocks selling for less than what a buyer of the whole company might pay, the so-called private market value approach.

It's largely a matter of guts, King explains, as impatience or jitters will always lead certain investors to sell stocks at prices below their true economic worth. "If there's a significant discount," he says, "we're interested."

Full story at Forbes.com