Forest City, [t]FCE.A[/t] (<span style='font-size:11px'>LAST</span>: 9.6<span style='font-size:11px'> 11/7/2008 1:17:29 PM</span>) (<span style='font-size:11px'>LAST</span>: 9.6<span style='font-size:11px'> 11/7/2008 1:17:29 PM</span>) .
Marty Whitman has recommended this one as long as I can remember; it looks like Third Avenue has over time accumulated about 25% of the outstanding shares for its various funds:
finance.yahoo.com
On the one hand, very surprising to see this stock now at such low levels -- a fall this year from $54 to under $10 now. (At which point it is at a ten-year low looks like). OTOH, not so surprising when observing that most (all?) of the real estate development companies are at near multi-year lows.
This stock could come back. Still, for someone like Mr. Whitman who espouses "safe and cheap", jeez anybody who bought in the last couple years ($40 or so) might have a very tough time of being satisfied with something touted as "safe and cheap" unless they maybe had confidence to average down on the position and plan to wait it out.
FCEA has almost always had a p/bk ratio of at least 2:1. Mostly higher than that. And until this year, that book value has always increased. Now p/bk is about 1. The dividend yield, almost always small, now seems to be up around 3%.
Unless someone here has some positives to say to sway me, my opinion is still that this is a difficult company and stock to figure, and even at current price, the stock is not attractive to me -- there are just so many other companies at low prices now.
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From "Value Investing" by M. Whitman, 1999, p. 16:
"...It was possible to invest in Forest City Enterprises class A common stock in 1991 at around $20 per share, even though the company's annual report stated that the appraised value of this investment builder's income-producing properties alone, virtually all financed with nonrecourse debt, exceeded $80 per share. At the the time, Forest City, operated in the ultradepressed real estate industry and was reporting accounting losses based on generally accepted accounting principles (GAAP). Charges for depreciation and amortization were being deducted from profits for accounting purposes while, for economic purposes, property values were probably increasing."
This time 'round, seems like at best property values are only holding steady. Maybe there's still a big margin of safety with the economic value of the properties (vs. book value); I suspect so, but don't know. |
