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Strategies & Market Trends : Value Investing

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To: Lazarus who wrote (61111)	7/27/2018 12:26:52 PM
From: E_K_S	Read Replies (2) of 78741

Re: ICHR, NLSN & BGS sold 50% of ICHR (high cost shares) @ $21.05/share, booked a small profit GN value still at $24.61/share using $3.00/share earnings for 2018. Decided to sell high priced shares and book small profit and hold out for earnings 8/7/2018 to see if they meet/exceed the $3.00/annual estimate target for 2018. ------------------------------------------------------------------------ Started small position in NSLN after doing the GN calculation w/ calculated fair value at $ $26.42/share In NLSN at the close yesterday @ $22.59/share following the other value buyers earlier in the day. Peeled off some BGS high cost shares (15% of position) to bring my avg cost down to $28.00/share. The dividend is at/near 6% w/ NLSN div at 6.2% so put those proceeds into NSLN. These BGS high cost shares w/ dividends allowed a very modest gain so thought the better value trade (ROI w/ div) is in NSLN. I have found using the GN valuation model as a basis for about 35% of the portfolio, it's good to keep added new names as they occur. If I buy in stages lowering my average cost, I can then sell high cost shares to finance other GN value plays. Benjamin Graham did not do his buying or selling in stages. He bought his entire position when the under value percentage was hit and then sold his entire position when it was fully valued. My modified approach is to scale into an undervalue play based on company specific events and issues (why are EPS off and/or falling). I then try to evaluate management, their actions/solutions and how far out can results be achieved. BGS is a good example as each quarter the new CEO is making progress. CMTL same way w/ turnaround after merger took 18 months to fully reflect fair value. Several other plays run into company specific problems (a lot is product/service obsolescence), like BGG and/or NLSN that could run into that over time and may not see previous EPS growth and/or earnings (no revision to mean) ever! Then you just need to close out the position and move on. At any one point I will have 6-10 GN valuation plays working their way to getting to fair value. Some are impacted by industry slumps and others by company specific issues. In all cases there must be an end-game plan by management or they never get back/above their fair value. EKS

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