S W, WCAP, earnings/capital appreciation and PE are very relevant...
This is an answer to someone who feels that the EPS and PE figures of WCAP are meaningless. Apparently he is shorting the stock: I guess, they'll become meaningful when he is long again!
EPS and PE are very relevant for the simple purpose of comparison with other Companies. On a punctual basis, (at a certain given point in time) there is no significant difference to the EPS, whether the holding is accounted for as capital appreciation or profit on sales of the holding. If the sale of the appreciated assets had occured, the actual EPS for the trailing 9 months would have been $4.58 and the PE just over 2, which is staggering for a Company that traded at the time I bought at $9 5/8.
The difference, of course, is that capital appreciation may rise or fall in line with the underlying asset, whereas the net profit on sale of asset is a fixed figure, it's the past.
So, if you have faith in the potential appreciation of these underlying assets, as I have, you prefer the future, which is appreciating unrealized gains, rather than fixed realized profits.
While I am not an accountant, I see that WCAP is allowed to treat its unrealized "capital gains/net asset appreciation" as actual EPS, so that must be an accepted and legal practice.
Regards, F. Goelo + + +
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