Re Assets - I disagree on the following statement
The Value of those Assets, and here I refer primarily to Fixed, don't really benefit a shareholder until such time as a company is liquidated, or those Assets are producing a Revenue. Same could be said about BRK various assets. BRK does not pay a dividend, so unless there is a liquidation, what benefit does holding BRK stock to a shareholder?
I own several asset rich companies. in some cases, theasset does not contribute to the income line, but the value is sill there. QUCT is an extreme example - they own a huge swath of ranch land in CA, that is worth a lot, but does not generate really any income. However, as long as QUCT does not fritter away the value of the land, the value will be there in the future as well. THe stock trades a huge discount to NAV and I don't necessarily expect this to close. I expect QUCT to at least appreciate at the same rate the assets and earnings (from the trust business grow ) do,and I am fine with that. If the discount to NAV would close, they would be a great windfall, but I don't necessarily expect this to happen.
Another example is MAYS , which own very valueanle RE in Brooklyn, which is leased below prevailing market rates. Hedge funds went in and expect management to redevelop or monetize some properties, as these leases expire, but that did not happen, Management continues to do what they have been doing for years and rent them out - the discounts to MAYS NAV does not close and now these hedge funds are selling.
I the end, this is all about managing assets. The liquidation endgame is hypothetical. A company like GOOG (which does not pay a dividend either manages their search business as an asset and tires to make it more valueanle, by growing earnings. A RE company tries to increase the value of their RE holdings, wether that is reflected in the income statement is a different matter. Malone is very good at manageing assets in the media business, while avoiding to pay taxes, as many times, his company don't show GAAP profits. |
