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Strategies & Market Trends : Value Investing
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To: Paul Senior who wrote (57903)8/30/2016 6:34:47 PM
From: Graham Osborn   of 78910
 
Looking at the operating metrics CBI looks cheap, but they've been destroying shareholder value for years. A 15-year plot of revenue, tangible book, and LT debt will show this. Tangible book has its hazards but it at least establishes an upper bound/ starting point for what the company might be liquidated for. As Spekulatius noted, a company may well have goodwill & intangibles saleable above the tangible book figure. The problem is that the resale value is compressible (like the intangible value of TRUMP's name) and tends to be unrealizable at the worst possible times, which one could argue was the reason Graham became relevant in the first place. CBI's tangible book value is around -2B, and the stock performance seems to be reflecting that. However, Howard Marks had a point that one should be slow to attributed price action to one's fallible convictions - after all a stock can only go up or down ;)
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