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A Rosy View Of Computervision


Inside Wall Street

A ROSY VIEW OF COMPUTERVISION

Rather than avoid distressed stocks, investment pro Marty Sass goes after them. By swinging for ailing companies, he hits many home runs for the $2 billion portfolio of New York's M.D. Sass Investors Services, which scouts companies with buyout potential.

Sass's latest hit--he has a 17.3% stake--is Computervision (CVN), a maker of computer-aided-design software, used in developing parts for autos, aerospace, and other gear. Now at 9 3/4 a share, Computervision "should double by yearend," predicts Sass, thanks to a "turnaround that's being helped by big contracts." Other pros speculate that Computervision is buyout bait.

Computervision was spun off by its parent, D.R. Holdings, when it sought Chapter 11 bankruptcy protection in 1992. Sass is convinced that Computervision will go the way of his past winners. One was Leaseway Transportation, which Sass bought at 8 1/2 a share in late 1994. In March, Penske Truck Leasing acquired Leaseway at 20.

Sass first bought Computervision in 1994, at 2 to 4 a share, when he saw its new management selling off assets and paring debt of $355 million. (Most debt accrued when D.R. Holdings acquired Computervision in a 1989 LBO.)

The stock rose as contracts poured in: Rolls-Royce signed a $23 million deal in March, 1994. A year later, Mercedes-Benz signed a five-year pact for Computervision's software technology. On July 25, Airbus Industrie, Europe's largest aerospace consortium, signed a $25 million contract. That kicked up Computervision's stock from 7 to 10.

Sass believes bigger contracts are on the way. So his 1996 earnings forecast of $1 a share exceeds the Street's 60 cents to 70 cents estimate, and his 1995 figure of 56 cents outstrips analysts' 44 cents.

Talk is that IBM, Microsoft, and Autodesk are interested in Computervision. "IBM would be happy to snare Computervision or at least have a strategic deal with the company," says a New York hedge-fund manager. And Microsoft would also like to get into Computervision business, he adds.

At 9, the stock price is 10 times the 1996 earnings estimate. "That's darn cheap for a company growing at 100%," argues one analyst. Its peers trade at a 15 to 16 price-earnings multiple. In a buyout, Computervision is worth at least 20 a share, this pro figures.BY GENE G. MARCIAL


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