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Still Has Value Right? RIMM still has patents, customers, a lot of technology, very competent teams and employees. It’s very likely that the company will eventually sell part or all of the company and that will be at some price right? So surely, there is value here right? My problem though is that I have no idea how much that is worth. It becomes a lot more complex in my opinion to value a company based on its liquidative value than what I usually try to go by (future earnings, P/E ratio, etc). Even at a few pennies, I’d be afraid to buy shares of RIMM because I’d tell myself that those who really know the value of those assets would be buying if it was that obvious.
Groupon Groupon is another one of those stocks that I have no idea how to value. I’ve written about the many questions that surrounded its IPO which make it very difficult for me to have a feeling about the stock. I could easily see the value increasing by 20-30% or decreasing (had written an ironic post about Groupon’s possible rise a while back) by the same margin and that is something that I personally try to stay away from. So don’t expect to see me trading either one of those names anytime soon (I haven’t traded RIMM in years and have yet to take a position on GRPN since its IPO)…
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>> It becomes a lot more complex in my opinion to value a company based on its liquidative value than what I usually try to go by (future earnings, P/E ratio, etc).
So something as tangible as NCAV
- 100% fact
- Double checked by people who will lose their license and worse if they don't do it right.
Is more complex to you than an estimate of future earnings
- 100% opinion
>> I’d be afraid to buy shares of RIMM because I’d tell myself that those who really know the value of those assets would be buying if it was that obvious.
OK, so I see $ 100 lying on the lawn but I tell myself it can't be. Others would have picked it up if it were so.
I agree though, not everything has a price. In fact, as far as I'm concerned, 90% of the stocks out there are worth $0 because:
1) I don't understand the business or
2) I do understand the business or
3) I would immediately replace management if I owned the company outright. How then could I be content to own a piece of the company with that management in place.