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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: dstange who wrote (14757)	7/8/2002 4:57:19 PM
From: Dale Baker	Read Replies (2) \| Respond to of 79022

You have 14,756 other posts on the thread you can peruse to learn about value investing. Don't expect veteran value hounds to start with you at square one just because you suddenly saw the light. Didn't the first 3500-point drop in the Naz give you a hint?

To: dstange who wrote (14757)	7/8/2002 4:59:05 PM
From: Jurgis Bekepuris	Respond to of 79022

Dstange, I follow Buffettology approach where I select the company first based on its leadership position, hopefully deep moat, brand value and so on. Then I check that the company satisfies my requirements of 15% ROE for at least 5 years and low debt/equity (<.5 most of the times). Then I perform the calculation using Buffettology spreadsheet and buy the stock if it promises >15% annualized return. The toughest parts in this approach are evaluating whether the company satisfies soft Buffett criteria. E.g. does C have a significant enough moat and leadership over other banks? Also nowadays it is quite difficult to evaluate future ROEs. I think I have only one holding that BRK/GEICO also had: JNY. I do not look at PEs, p/cash flow, p/book. In this thread there are people who use these criteria and are much more knowledgeable about them than I am. I own some TAVFX for the deep value investing. BTW, I looked at FNM and FRE and they offer very attractive returns if one overlooks their debt/equity. I understand that their debt is not conventional, since their are buying and reselling mortgages, but this high leverage is a bit troubling. Buffett & Munger exited FRE position because of this. Jurgis - perhaps we should move this discussion to Buffettology thread... ;-)

To: dstange who wrote (14757)	7/8/2002 5:52:29 PM
From: Bob Rudd	Respond to of 79022

dstange: While value is an underlying theme, I suspect each participant has individual twists on that theme. I tend to look at companies/industries that are way out of favor for situations where selling might be overdone. I tend to use Enterprise multiples of EBITDA, EBITDA - CAPEX, & FCF rather than price multiples in order in include both cash and debt. I look for various red flags, but will overlook warts if price appears to more than reflect negatives. Also look at competitive and qualitative issues. Sometimes I pay attention to the chart...other times I ignore it when the value case appears particularly compelling. When someone posts an interesting pick, I often try to 'take it apart' asking what's wrong with this...and I appreciate it when others do likewise.