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Frankly, I am becoming paranoid...

What is going on with our country when it comes to bailing out of business? Do shareholders deserve any respect whatsoever nowadays?

I was burned last week with Dana, a major auto parts manufacturer that abruptly filed for bankruptcy on March 3, 2006.

Yes, I know, some of you are going to say that I should have seen it coming, especially under the recent Delphi experience, blah, blah, blah, but there are a few things that truly infuriate me. Bear with me and read further instead of rolling your eyes...

Dana was created about 100 years ago and has supposedly reported a profit for the past 15 years. Also for the past 15 years, the company has consistently paid dividends. They even paid a 12 cents quarterly dividend as late as September 2005.

The book value stands on the last statement at around $16 with a reported cash position on 6/30/05 of $666M. The stock price dropped from $17.60 to the $5 range shortly before the bankruptcy filing.

Now, we suddenly read that the last quarter alone originated a loss in the vicinity of $1,3 billion! Oh, and, by the way, we are also going to restate some of the previous reports, due to some accounting errors...

So the CFO retires the day before the bankruptcy filing, but he's not leaving the distressed ship... not at all. He's going to stay as a consultant for the mere compensation of $35K a month. Certainly the company must have access to his expertise and, at such a bargain price, why not do it?

Did I mention that the bankruptcy concerns only the US operations and that all the off-shore business stays as it was?

Of course, you know what happens to stockholders in the case of bankruptcy... They'll be left with pennies, if they indeed get anything at all.

Now, please somebody tell me how it is possible that a company could be allowed to file for bankruptcy on the very first sign of difficulty? Certainly I understand that the position of automaker parts is quite a challenging one with the consistent market share losses that Detroit is suffering from. But <$1,300,000.000> in one quarter? Didn't anybody see it coming?

I feel just plain cheated. I consider myself as an educated value investor and have been investing in stocks for almost 40 years. The one thing I need to rely upon is the numbers that are given to me. If I must be suspicious of all the financial reports that are published, I might as well bail out and gamble in Las Vegas. At least, there, we know what the odds are.

It certainly doesn't do me any good, financially speaking, to write that board, but it most certainly feels good to vent...
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