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As far as performance goes, the past eight months have pretty horrible for Horizon Offshore (HOFF). Which is precisely why the managers of Aegis Value fund are snapping up shares.
There's not much troubling Horizon other than a lack of love on Wall Street. The company contracts with oil companies to build marine drilling stations and pipelines. Revenues nearly doubled from 1999 to 2000 and again from 2000 to 2001. Profits grew five-fold during that same stretch.
A fire on one of Horizon's rigs last September will bite into 2002 profits, as the company expects to take its $2 million insurance deductible as a charge. But the setback seems minor and the company's CEO says management's focus is on expanding business into international waters and on increasing market share.
That plan suits the managers of Aegis, who invest in small companies, like Horizon, with a business-boosting strategy. The stock price must also be less than book value.
At about $4 -- less than half Horizon's $8.42 book price -- the stock fits the bill. The stock trades at just over 11 times the 2003 consensus earnings estimate of 38 cents per share.



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