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    Sunday, April 13, 2003

    I just received my AES annual report. Reading through the intro letter really makes me think these guys are going to greatly improve their stock and bond price in the near future. They have demonstrated an ability to sell assets and greatly improve the profitability of their remaining assets through cost cutting. Their new focus on discipline in terms of price paid really resonates and the new CEO's comp package in the proxy statement is tied to various financial performance targets. With a price to '03 cashflow of 2 this is likely to increase in value (average is 15 for the S&P). They have outlined a three phase plan, with the second being the building of a strong foundation and the third resuming a sensible (financially based) expansion program. I gain most confidence from the changes in management, the guys that screwed AES are no longer in control. Price to sales has traditionally been over 3 and for last year was 0.2. $15 or so for the equity is really pretty reasonable.
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    Disclaimer and Disclosure Analyses are prepared from sources and data believed to be reliable, but no representation is made as to their accuracy or completeness. I am not paid by covered companies. Strategies or ideas are presented for informational purposes and should not be used as a basis for any financial decisions.
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