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  • batbeer2 commented on Thomas Macpherson's article 14 hr ago
    Are We Value Investors?
    We were recently talking to a fellow investment manager and somewhere in the conversation - quite nonchalantly - they mentioned that we weren't...
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    batbeer2 08-02 03:45
    • Thanks for an article worth reading.

      You say:

      >> In our definition, equity value investing is purchasing shares of a corporation in which the markets have created a significant variant between the price of the stock and the intrinsic value of the company’s shares.

      There are many schisms of the church of value investing but it is of course a matter of definitions. Perhaps "true value investing" as referred to by your interlocutor could be defined as the activity of buying 50ct dollars.  

      It seems very few people on the interweb take that definition seriously. More than 95% of the ideas presented on this site or on a place like VIC, not to mention SA are about companies trading at a percieved discount of 15% to 30%. Assuming the analyses are correct, those would be 70ct dollars and not 50ct dollars. 

      In some cases people may be willing to pay a bit more for (percieved) quality but I believe most ïnvestors are simply unwilling to go the extra mile to find that 50% margin of safety; thinking 25% should be enough and hoping the market will quickly realize the error of its ways.

      Ever hopefull I continue to hunt for quality stocks at a 50% discount. In ten years I have found four. The really bad news is that I didn't recognise the quality of the first two. I'll let you know when I find another one. 


  • batbeer2 commented on batbeer2's article 07-29 13:37
    Nam Tai - Value Idea Contest Submission
    The case for Nam Tai is simple. The company trades at a meaningful discount to book. This is remarkable in light of the fact that the book value of...
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    batbeer2 07-29 14:37
    • Just in case somebody out there still cares....

      Nam Tai just released some appraisals of the land:


      That's for the current market value of the land in Bao'an alone. While Nam Tai does own some more land elsewhere in Shenzhen, the site in Bao'an is probably the most valuable.

      On average it works out to $200m; that's a fair market value of USD 200 million for the land in Bao'an as it is today. In the words of DTZ (one of the appraisers):

      "The estimated amount for which an asset or liability should exchange on the date of valuation between a willing buyer and a willing seller in an arm's-length transaction..." 

      That's about $5 per share of land plus $5 per share of net cash for a stock trading at $4.75.
  • batbeer2 commented on Grahamites's article 07-29 01:45
    Spotting Creation of Value - Additions to The List
    In my previous article on Spotting Creation of Value, I listed the number of ways I have personally observed that a company can create value for...
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    batbeer2 07-29 02:45
    • In my view, #3 does not truly add value. 

      When a company acquires cheaper peers and pays for that with its own high-priced stock, it is not the company that is adding value. It is the shareholders bidding up the stock who are subsidizing the ambitions of the CEO. While this does raise per-share earnings, it should not be confused with the company building wealth for shareholders. 

      Is it not better for a company to be building wealth for its shareholders as opposed to shareholders bidding up a stock so the CEO can grow his empire?



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