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Strategies & Market Trends : Value Investing
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To: Paul Senior who wrote (16344)2/4/2003 12:08:36 PM
From: Bob Rudd  Read Replies (1) of 78516
 
Paul: I tend to use both quantitative & qualitative at both ends...to varying degree, depending on the situation. The quanitative measures on both sides are the usual suspects with emphasis on enterprise rather than price multiples...also look at Net Liquid Asset Value as a safety net gauge. Qualitatively, on the buy side some businesses and business models, like video conferencing, are very attractive to me. I try to guage the extent I have a 'feel' for the business or will be the last to figure out when it's circling the drain. I'm paying more attention to red flags in the aftermath of recent blow-ups [sort of like a deer the day after gun season starts]. Look for management issues like 'fit' compensation, prior problems. Look at competitive issues broadly[5 forces]. I always look at the chart but pay chart signals more heed in businesses where I don't have as good a handle on the situation.
On the sell side, if the market hands me a quick 30+% , I'll often look at getting out [On a trendline break] unless events have kept up with or exceeded the rise [big contract]. Newly discovered red flags will often send me scurrying towards the exit, too. Sometimes it's better to sell when the situation changes and then noodle on the sidelines over a re-buy decision because it can be tough to be objective when you have a chunk of something.
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