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Strategies & Market Trends : Value Investing

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To: blankmind who wrote (20370)	12/31/2004 10:11:41 AM
From: Steve168	Read Replies (1) of 78566

Losing money (cash burn) is usually the first reason for a stock to drop below net liquidation value. I don't know if TFS will become profitable. I like those stocks because every investors know those issues and that's why they dropped so low. Those cash burns, lawsuits, other negative news had already priced in the stock. The trick is to figure if management already started to cut cost under shareholders pressure (sometimes insiders if they own a lot of shares), if their assets and infrastructure still have value. I probably won't buy a textile factory in US, but if this is a state of art manufacturing plant in China (and other low-cost Asia countries) can make millions of TFT screens for small gadgets like cell phones, I think they have a good chance since it will cost other people more money to duplicate their business. Value investing is about buying deeply undervalued stocks that other investors are scared and don't want to buy, and with a basket of those stocks to provide margin of saftey.

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