Something to sleep on

[Blik]

Hello Forum. Lewis at 3435 and current PEs NAVs and all that has a Graham Number of around 5.71. Using Neff's philosophy for valuing a share, the Neff number is now around 5.72. Very close to the Grahama number. Now as clever people [I am not] have told me if these two number cross (the Neff number goes lower than the Graham number) then its a good buy. So my question: What does the forum think of Lewis? Can someone pick the bottom? All indications look good. Good growth over the last couple of years, good DY, low PE etc. I understand the effect the next couple of Mboweni hikes may have on this share - but to a value investor this looks good.

[#2]

Blik - you should have a look at a Business Day articlehttp://www.businessday.co.za/articles/topstories.aspx?ID=BD4A769487 regarding how these retailers (Lewis ? and Ellerines bought by African Bank) have been "upfronting" income from insurance premiums which they raise in Captive Insurance Companies owned by themselves. ABL have said they overpaid for Ellerines by about R450m because of this accounting method - shades of Enron? Although whilst this article seems to suggest the surprise in Lewis might be the other way around, another article discussing Ellerines/ABL suggested that Lewis would be hit by the same thing!

[Major]

Good trading update and good management. One to keep for the long term, but I doubt it's got much in the next few months. As the interest rate cycle peaks it might start turning...

[Blik]

Do you think they have been running the same insurance "scam" that Ellerines (and JD group) were doing? If not then a good company is being tarred with the same brush. Maybe one to watch then when it looks like the credit cycle may turn.