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Strategies & Market Trends : Value Investing

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To: Madharry who wrote (42073)	3/31/2011 1:20:11 AM
From: Spekulatius	Read Replies (1) of 78670

3rd Ave is too focused on private market value. The problem is that in some situations there is no private market. japan is such an example or during the credit crunch, due to lack of financing. Then the stocks that are held based on private market value expectations can fall very deep. There is a difference between investing based on private market value and investing based on value (as is). If you buy based on private market valuation, availability of financing is important and the presence of buyers. Both can disappear rather quickly. If you buy based on the value (NPV of the discounted cash flows) of the entity in it;s existing form, you neither need a buyer nor cheap financing to come out ahead. I also think that 3rd Ave has a bad hand with financial entities - they are late to acknowledge mistakes in their analysis and then ride the stuff all the way to zero. I do like to read their letters for ideas. In many cases, I have been able to buy stocks cheaper than they do, in other cases I buy their discards. I also like that they prowl around the Globus and buy wherever they find something cheap.

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