DOV: That's how I see it too! Using a formulaic approach - very dangerous, this hindsight thing - I shouldn't be paying more than about $22 for DOV if my guess its sustainable ROE is about 15%. No more than $29 if my guess is that its ROE going forward would be about 20%. (DOV closed down on lower earnings today @ $25.74.) DOV has had ROE at 20% level for 6 of past 10 years, my figures show.
I could try that same formula on RTRSY. Again, very dangerous, esp. since book value is a small number and ROE is very large -- 40% or more in many of the past ten years. If I expected RTRSY to see 40% ROE again, then the most I should be paying to buy RTRSY (It closed today @ $18.14.) would be about $34. So according to my humble formula RTRSY is a buy! Just looking at the historical chart, RTRSY has sold over $50 for much of 1996 through until 2002. So it's not out of the realm of possibility that RTRSY could do at least $34 again.
Of course ball-park formulas based solely on historical numbers are maybe worth more as conversation pieces than determinants of actual buy points. Also, for me, as regards DOV, I'm somewhat confident or least hopeful that DOV can continue its 20% numbers, given a good enough economy. As regards RTRSY, whenever I've looked at it (always only cursorily though), I've just not got those kinds of good vibes as regards its performance going forward.
Paul Senior
and I've been wrong many, many times. |
