(Trader) Berney, RE: LU and other bloated whales
Actually, the Big Boys had a slight net
outflow on LU. What a bloated whale LU is; obviously no one buying
this one based on any fundamental analysis.
Can we officially call you Trader Berney???? As I recall 5/1 was your target date. Before I get to my main point, remember ADPT they were up to 23ish, now they fell like a rock back under 20. I guess the street was not happy about earnings.<g> I still like them for the long term, maybe 2001 leaps.
Valuation and spotting whale before you buy them
You got my attention in your comments about LU and other whales. I found a post describing your FA scoring system. I like the system on the 'numbers' side of FA, but it leaves me with questions about the 'product(s)' and 'market' parts of valuation. The few books that I have read on valuing companies are similar to yours in that they focus on historical numbers, and some add future projections. I constantly struggle with valuing the 'intangable' aspects of product strength, current market position, future trends, management aggressiveness, etc.
The reality of my personal position is that I can not compete with people like yourself on the 'numbers' side of the equation. You have much better grasp of what they mean, how they interrelate, and what can be hidden within accounting practices. On the technology use and future trends part of the equation, I feel that I can be as good as most and better than some because this is part of my background and training.
So using a company like LU,CSCO, MSFT, INTC and even CPQ as an exercise, how do the 'intangible' aspects of the company fit into a reasonable decision making process? Of these LU, CSCO, MSFT and INTC are domineering gorillas. CPQ is becoming one with the tandam, and dec mergers. Each are strong competitors in their niche. Each have strong brand names (LU not as strong with consumers). Each has a large amount of cash for acquisitions/R&D/etc. (i.e. LU buying Yurie for $1 billion cash, CPQ buying DEC with both stock and $$billions cash). Each have strong management teams focused on continued growth and dominate positioning in their markets. (I could go on.)
I am asking this question about fair valuation because each time I buy a company it seems like am making my 'best' guess, WAG and sometimes SWAG. WAG = Wild Ass Guess & SWAG = Scientific Wild Ass Guess. Mostly I just WAG and buy based on my assessment of management's continued ability to grow the company and what I think are the future trends in their market. I hate buying a company when they are at they all time highs, but have recently done so.
Is LU overvalued? Is INTC overvalued? Is CPQ over/under valued? I really could not say. If I look primarily at PE I would say the whole market is way overvalued. When I look at who can ride the future waves, I have recently put my money on each of above. I would say that on PE CREAF looks great (PE under 12) and on future value based on trends they are only so-so. While LU's PE (somewhere under 10,000 :), makes me want to own puts, but instead I have LEAP calls based on their ability to surf the great Telecom wave which is still gaining momentum. IMHO
I am very interested in how others 'value' a company. I feel my greatest weakness is the numbers side. I do look at PE, ROE, PS, debt, growth etc, but this is basically to confirm that they can surf the wave. I don't have Steve's Doji JuJu abilities to help me time my buys and sells either. <vbg>
I hope I made a bit of sense, and all opinions are welcome.
Chris
PS Put some change into: 1 WLA Jun 190 call @ 10 3/4 (now @9 5/8, Don't you just hate that! ;-)
PPS (Trader) Berney, You have my continued support with not smoking!!!!!!!!! Just trade stocks instead. Trading is alot less stressful! (not!) <vbg>
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