re AEG. It's a stinker all right. And for such a large company too.
Yahoo shows that the stock has traded at $20 or more in these years:
finance.yahoo.com
The lowest price/book (annual average) I have going back to '92, gives 1.18. Using a book value of 8.92 (aside: A problem for me with some of these ADRs is the inconsistency I find among sources for p/book, div., div. yield, etc.) this would give a low average price of about $10.5/sh. So I agree that the stock price could drift down or crash down and stay below 10. I'm not sure it follows though that funds would then be sellers without their seeing any further adverse company news. In seven of the past 10 years the stock has sold for 2x book value or more. If book value remains at 9, the stock could just as well be at 18+ in a couple of years.
I'll give that this way of looking at it is rear-view. And that some fundamental flaws may now have been exposed by management. The stock price has come down to reflect some or maybe all of this. Regardless, I'll assume management knows their business, is motivated to improve it, and with some time, maybe 1-2 years, they will. And the stock might recover.
jmo,
Paul Senior |
