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Long-Term Report		February 18, 2003

STRONG BUY
Fremont General (NYSE) FMT	$ 4.50
52-week range	$2.98-$7.20
Market Cap	$331.8M
Shares Outstanding	75.2M
Book Value	$5.88
Price/Book	0.75
Average Daily Vol.	198,000
Target Price	$8.00
Target Percentage	77.7%


Fremont General Corp. is a holding company, which owns a commercial and industrial bank primarily located in California. We continue to be attracted to Fremont General as an undervalued financial institution. The stock of Fremont General moved lower in late December but has since rebounded. There were no fundamental developments that accounted for this decline. It appears that this price weakness was the result of year-end tax selling. Since then, FMT has performed incredibly well considering the fact that the DOW has declined over 1000 points in this same period. This leads us to believe that FMT will be an out-performer, as soon as the market rebounds in any meaningful way.

The reasons for our attraction toward Fremont General are:

The company has earned $0.99 per share for the first nine months of 2002. We expect the company to earn $0.38 per share for the fourth quarter, resulting in full year earnings of $1.37. The stock is presently selling at a 3.0x price/earnings multiple. The normal P/E for a bank stock is 8-10x, which would equate into a $10-$12 share price for FMT. Most impressive has been the reduction in long-term debt. During the first nine months the company has reduced long term debt from $342 million to $270 million. The company has stated that an additional $73 million of debt will be paid down by June 30, 2003. This will bring long-term debt down to a modest $200 million level. As of September 30, 2002, Fremont General had a book value of $5.88 per share and a current dividend of 1.8%. FMT has cash of $2.27 per share.
Consequently, we believe that Fremont General is undervalued and overlooked by the investment community. Technically speaking, FMT has a current short position of 9.4 million shares. Should FMT report reasonable earnings in a few weeks (as expected), any significant short covering will likely push its share price above our $8 target price.

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