Owner: Barel Karsan URL:http://barelkarsan.com Join Date: Fri, 26 Sep 2008 16:18:18 -0500 Rating:0 Site Description: All about finding and discussing current value investments, questioning conventional wisdom, applying logic to investment decisions (rather than falling prey to psychological biases), and always applying a margin of safety! Site statistics:Click here
Value Investing Today: Chp 12: Are Stocks an Intelligent Investment? 2008-09-25 12:00:01 Brandes explores the idea of whether stocks have historically been a good asset class to invest in. He references a report by Ibottson that shows 75 years of return performance for the S&P 500 stocks, U.S. government bonds and U.S. government treasuries. The compounded rates of return over that time frame are 10.2%, 5.5% and 3.8% for the stocks, bonds and cash asset classes respectively. He co Read more:Value
, Investing
, Today
, Stocks
, Intelligent
Value Investments Gone Wrong? 2008-09-25 05:11:01 In 2004, motor vehicle sales were booming, as the economy was strong and customers continued to buy larger and larger vehicles. The stock prices of most car manufacturers (domestic and foreign alike) were at recent highs. Today is a different story, as the stock prices of GM (GM) and Ford (F) have plummeted from those highs, while Toyota (TM) and Honda (HMC) have held their own despite the tough e Read more:Value
, Investments
, Wrong
, Gone Wrong
The Intelligent Investor: Chapter 7 2008-09-24 12:19:01 The following summary was written by Frank Voisin, who regularly writes for Frankly Speaking. Recently, Frank sold four restaurants and returned to school to complete a combined LLB/MBA.While the last chapter discussed the things that the enterprising investor should NOT do, this chapter outlines the things that an enterprising investor SHOULD do. There are four possible ways the enterprising inve Read more:Intelligent
, Investor
, Chapter
Pension Accounting Made Easier 2008-09-24 05:00:01 As of September, 2006, U.S GAAP implemented SFAS 158, which requires companies to now fully recognize on the balance sheet, the over-funded or under-funded status of their pension plans and other post-retirement benefit plans.There are direct implications of this accounting change on performing ratio and trend analysis. Under the new rules, if a company previously had an under-funded pension liabi Read more:Pension
Value Investing Today: Chp 11: Managing Risks and Your Portfolio 2008-09-23 12:00:01 Brandes defines investment risk as the potential of losing money. He suggests that a portfolio needs to be designed to limit risks. Short term fluctuations in stock prices is not risk by his definition, since value investors invest with a relatively long time horizon and at a stock price that makes economical sense. Brandes suggests to always to weigh a businesses value against its stock price. Yo Read more:Value
, Investing
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Price To Cash Flow: A Useful Measure? 2008-09-23 05:41:01 We discussed here the study undertaken by Bauman, Conover, and Miller that demonstrated superior returns of stocks of the lowest P/B quartile. In the same study, the trio studied relative returns of stock quartiles separated by Price to Cash Flow (P/CF). Cash flow is quite a volatile number, as it can be affected by a number of accounts including working capital, investments, loans, dividends etc. Read more:Useful
, Measure
Value Investing Today: Chp 10: Unique Aspects of Global Investing 2008-09-22 12:00:01 Brandes points out that although he recommends investors to participate in global investing, foreign investments are subject to currency exposure, political risks and different accounting standards than domestic investments.Investment returns with global investments will depend on the change in price and the change in the relevant currency valuations. Brandes believes that exposure to foreign curr Read more:Value
, Investing
, Today
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Value In Action: Dundee Corp 2008-09-22 05:06:01 Dundee Corp (DC.A) is a majority owner in several business lines consisting of wealth management, real-estate and natural resources.At the end of 2002, it had a market cap around $350 million, but it had net assets (assets less liabilities) of $480 million, and was profitable. These stats alone show only a low Price to Book value; one must still investigate the assets to determine whether the real Read more:Value
, Action
Home Builder Discounts 2008-09-21 12:57:00 One quarter ago, we looked at the discounts that many home builders were trading at relative to their book values. Let's see what they look like now:Right off the bat we see that a couple of home builders with high debt levels were unable to continue in their former states. Writedowns in this industry continued in the past quarter, as book values continued to fall. In many cases, however, market v Read more:Builder
, Discounts
Value In Action: H Paulin 2008-09-21 05:00:01 H. Paulin (TSE: PAP.A) is a company that manufactures construction quality fasteners such as bolts and screws. In April 2005, the stock traded at $37.50 per share and paid a 50 cent yearly dividend. At that time, the company had a market cap of around $40 million dollars and had a price to book ratio of 0.93. The operating margins of the company during the last business cycle looked healthy. Read more:Value
, Action
Value Investing Today: Chp 9: How To Invest in Companies Worldwide 2008-09-20 12:00:01 In this chapter, Brandes explains options on how to purchase shares in a foreign company. Investor's wanting to buy foreign stocks can purchase ordinary foreign shares (ORDs), depositary receipts, foreign shares listed directly on a local exchange (typically only large multinationals do this) and/or packaged investments such as mutual funds or exchange traded funds ETFs.Purchasing foreign stock ex Read more:Value
, Investing
, Today
, Companies
, Worldwide
Home Depot vs Lowe's: Return On Equity 2008-09-20 05:44:03 Here's a look at the ROE of Home Depot
and Lowe's over the last few years:Considering all the negativity surrounding Home Depot
, this has to come as a surprise to most. But looking at ROE alone does not tell the full story of how well a company is managed. If one company is too highly leveraged, then ROE can look good for a long period of time, before finally crashing down and leaving shareholders Read more:Return
, Equity
The New Contrarian Investment Strategy: Chp 13: Are Common Stocks a Good Investment Today 2008-09-19 12:00:02 In this final chapter of the book, Dreman explores whether high inflation is bad for equity investments.The well understood type of inflation is when too much money is chasing too few goods. However, Dreman presents other factors that have recently been sources of inflation including 1) higher commodity prices being transferred in from overseas, 2) the sociopolitical belief that real income needs Read more:Today
, Stocks
, Strategy
, Common
New Dragon Asia Corp...Cheap? 2008-09-19 05:17:01 New DragonAsia
Corp (NWD) produces and distributes noodle and soybean products to wholesalers and retailers in China. It's in a stable industry, provides a diversified array of food products to various customers, has a P/E of 4.2 and a P/B under .5, warranting a closer look.As we've discussed many times now, you cannot properly value a company without reading the notes to its financial statements Read more:Cheap
The Intelligent Investor: Chapter 6 2008-09-18 12:09:00 The following summary was written by Frank Voisin, who regularly writes for Frankly Speaking. Recently, Frank sold four restaurants and returned to school to complete a combined LLB/MBA.As discussed in earlier chapters, the difference between defensive and enterprising investors is small. The enterprising (or aggressive) investor should still divide his portfolio between high-grade bonds and high- Read more:Intelligent
, Investor
, Chapter
From the Mailbag: Kaboose 2008-09-18 05:00:00 Kaboose (KAB) is an online advertiser and marketer geared towards families and children. Some of the websites they run include bounty.com, babyzone.com, amazingmoms.com, funschool.com, zeeks.com and bubbleshare.com. Kaboose generates revenues through online commerce and advertising. The company has been growing revenues primarily by making strategic acquisitions of websites geared towards their t
Value Investing Today: Chp 8: Why Go Overseas 2008-09-17 12:00:02 In this chapter, Brandes begins to focus on the topic of investing globally. He suggests some reasons to consider investing overseas including 1) you have more selection, 2) you can often find better opportunities abroad than in your domestic market (because most of the world's businesses are outside your domestic market) and 3) you can reduce risk by finding undervalued companies.In 2001, a stud Read more:Value
, Investing
, Today
Price To Book: What Is It Good For? 2008-09-17 05:16:01 We discuss the Price to Book values of various stocks quite often on this site, but how useful a metric is it? From a logical standpoint, as a purchaser of a business (which is how we view all our stock purchases), a prudent buyer ensures - barring certain exceptional circumstances - that he does not pay too much more for a company than the value of its assets. In this way, he receives downside pr
Value Investing Today: Chp 7: Corporate Governance and the Value Investor 2008-09-16 12:00:03 Brandes describes corporate governance as the relationship between a company and its shareholders. The board of directors are elected by the shareholders and have fiducial responsibility for the shareholders. The board of directors appoint officers to manage the company. Problems often arise because of a lack of alignment between shareholders and the management of the company. Shareholders own st Read more:Value
, Investing
, Today
, Investor
Analysts Continue To Bewilder 2008-09-16 05:34:01 How can investors trust analysts who can't tell the difference between a company that's solvent and one that is worth virtually nothing to shareholders. We've seen other examples here where analysts appear fraudulent in their recommendations. The latest example? That of Lehman Brothers (LEH).Yesterday, the company filed for bankruptcy, and the share price lost 95% of its value. However, rumours ha Read more:Continue
Value Investing Today: Chp 6: Gathering Company Information 2008-09-15 12:00:03 Brandes provides some sources of information that will assist investors in answering the key questions of whether they want to own a particular company and at what price. Brandes first likes to understand a company's history, its line of businesses and any recent events that may have significantly affected the price of the stock. After this, if he is still interested, Brandes will do a valuation o Read more:Value
, Investing
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, Gathering
Oil Demand Starts To Falter 2008-09-15 05:39:01 As we discussed here, oil at these prices does not make for a good long-term investment, contrary to what alarmists will tell you. High oil prices cause a decrease in oil demand, and therefore a drop in the oil price, over time. Yes, demand is fairly sticky in the short-run, as it takes time for energy efficiencies to be implemented and for changes to occur in the make-up of the economy's fixed as
The Intelligent Investor: Chapter 5 2008-09-14 11:54:01 The following summary was written by Frank Voisin, who regularly writes for Frankly Speaking. Recently, Frank sold four restaurants and returned to school to complete a combined LLB/MBA.As mentioned in earlier chapters, Graham suggests that all portfolios, regardless of how aggressive or defensive the investor, must include both bonds and stocks. The major differences between defensive and aggress Read more:Intelligent
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From the Mailbag: The Great Atlantic and Pacific Tea Co. 2008-09-14 05:00:01 The Great
Atlantic & Pacific
Tea Company (NYSE:GAP) is a food retailer operating 447 stores in primarily north eastern U.S. states. GAP sold its Canadian operations to Metro Inc. in 2005. The stock has fallen quite a bit this past year from a high of $32.86 to the recent price of $13.64. The company has a market cap of ~$650M, is trading at a P/E of 13.6 and does not pay a dividend. Value inve
The New Contrarian Investment Strategy: Chp 12: The Problems of the Investment Advisor 2008-09-13 12:00:02 Dreman notes that investment advisors and employed money managers suffer from institutional career pressures in addition to the individual cognitive biases previously discussed. These pressures and biases explain why professional money management and counsel has a less than stellar investment track record.Often, working in an institutional setting means working in teams. Cohesive teams run the ri Read more:Strategy
Evaluating Management: Inventory 2008-10-13 12:11:01 One of the most important factors in determining whether a company is worth an investment is the quality of its management. Unfortunately, this assessment can at times be highly subjective. Reading interviews or comments from management can often be of little value. After all, management may have great communication or oratory skills, but that doesn't necessarily translate into good business execu Read more:Management
, Inventory
From the Mailbag: Liquor Stores Income Fund: Part 2 2008-10-13 05:00:00 As I wrote about previously, Liquor Stores Income
Fund (TSE:LIQ.UN) operates retail liquor stores in Alberta and British Columbia. From a book value perspective, there is a great degree of variation in the resulting price to book ratio depending on whether you accept the full $260M of goodwill as realizable or not. One way to approach the issue of goodwill is to accept the book value only if the e
The New Buffettology: Chp 8: Interest Rates and Stock Prices 2008-10-12 12:00:00 Warren believes that investments compete against each other for investors' dollars. He also believes that a business is worth what it can earn for investors during the time that it is owned. The comparison of available investment returns between various investments will determine the selling price for a given company. The value of a company's earnings is dependent on interest rates. If interest ra Read more:Interest
, Rates
, Stock
, Prices
, Interest Rates
Dividend Yield: Does It Matter? 2008-10-12 05:01:00 All else equal, is it better to own a company with a higher or lower dividend yield? Theoretically, ignoring certain tax implications, it makes no difference. The company with the lower dividend gets to re-invest the retained earnings to generate more cash in the future that makes up for the current lower payout.In practice, however, companies with higher dividend yields actually outperform the ma Read more:Dividend
, Yield
The New Buffettology: Chp 7: Using Warren's Investment Methods to Avoid the Next High-Tech Massacre 2008-10-11 12:00:00 Warren doesn't put any "stock" into investing in new industries since 1) investors will run up share prices in anticipation of immediate wealth, 2) there is lots of competition in new industries, 3) many of the new companies don't survive and 4) the new businesses don't have a history of a product with a durable competitive advantage. A great example of Warren passing over a new and in fashion ind Read more:Warren
, Methods
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