Yes, a pretty good summary of ABH with salient points and threats.
I generally try to find one or more ruling reasons to buy a stock. Although you indicate ABH is a value play, you don't actually come right out and say why you believe the stock should be bought now, or if it should not be bought at all now
Company is a cigar butt at this time. Imo. And I'd guess Dr. Graham might classify it as such too. I further speculate that he'd say for the conservative investor, it's a no-go because the company's just out of bankruptcy, and there's not enough history of positive earnings. For his enterprising investor though, he might say, your stock fits. Because the stock's way below stated book value, the company does have real assets, the debt looks like it might be manageable, and looks to be reduced. I would assume Dr. Graham would say if it were to be bought, it should be in either a diversified portfolio or within a package of other cigar butts.
The stock appears to be selling at prices below what it traded for when it just came out of bankruptcy. I don't know at what price the big investors bought their shares (maybe at lower prices when the stock was in bankruptcy): There are a number of supposedly astute value investors who still may be in this stock: Fairholme (indirectly buying more last month: $10M worth at over $22/sh), Paulson, Chou (ref: my earlier post here on him and ABH), Steelhead Partners, Clownbuck.
I am following along with a few shares which I intend to hold 12-18 months to see if the value in the company that might be there, gets realized. |
