Hi March09Man I hate this site sometimes - I spent a long time...

Hi March09
Man I hate this site sometimes - I spent a long time formulating a reply to you, and the stupid way it makes you review your post... well I thought it was posted and lost the entire thing.

Anyway the quick version is this:

I cant predict what the share price will do obviously. and I am not saying that RCR is not cheap which on a multiple basis it clearly is. But the market certainly appears to agree with me on the following:

The business is walking a tight rope of tiny margins and low returns on invested capital. This is not a good thing for an investor. Ultimately price is what you pay and value is what you get. I would rather pay a higher price for a better business that will provide greater returns over the long term.

Margins have decreased from 6% in 2006 to 2.99% in 2009
ROE has decreased from 14% in 2006 to 7% in 2009.

As discussed, for something in the same sector, that is far more likely to make you rich particularly if you dump a lot of money on it and keep it there for the next 5 years, try ANG. ROE around 30% margins 17%, great cashflows, low debt and economics that are a capitalists dream - limited competition, flexible pricing and a huge market.

That is a business that will make you rich. Also FGE, WOR and MND are all better businesses than RCR - and FGE even trades on similar multiple if you are concerned with price.

Good luck!

Cheers

Sauce