Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: Jurgis Bekepuris who wrote (16294)	1/28/2003 4:40:13 PM
From: Paul Senior	Read Replies (1) \| Respond to of 78998

DOV: That's how I see it too! Using a formulaic approach - very dangerous, this hindsight thing - I shouldn't be paying more than about $22 for DOV if my guess its sustainable ROE is about 15%. No more than $29 if my guess is that its ROE going forward would be about 20%. (DOV closed down on lower earnings today @ $25.74.) DOV has had ROE at 20% level for 6 of past 10 years, my figures show. I could try that same formula on RTRSY. Again, very dangerous, esp. since book value is a small number and ROE is very large -- 40% or more in many of the past ten years. If I expected RTRSY to see 40% ROE again, then the most I should be paying to buy RTRSY (It closed today @ $18.14.) would be about $34. So according to my humble formula RTRSY is a buy! Just looking at the historical chart, RTRSY has sold over $50 for much of 1996 through until 2002. So it's not out of the realm of possibility that RTRSY could do at least $34 again. Of course ball-park formulas based solely on historical numbers are maybe worth more as conversation pieces than determinants of actual buy points. Also, for me, as regards DOV, I'm somewhat confident or least hopeful that DOV can continue its 20% numbers, given a good enough economy. As regards RTRSY, whenever I've looked at it (always only cursorily though), I've just not got those kinds of good vibes as regards its performance going forward. Paul Senior and I've been wrong many, many times.

To: Jurgis Bekepuris who wrote (16294)	1/28/2003 5:36:31 PM
From: Paul Senior	Read Replies (1) \| Respond to of 78998

Fwiw, another stock that's come into buying range based on an ROE formula approach is LBY. my.zacks.com Here there are some additional positives as well: Steadily increasing book value and decent (imo) profit margins. PSR has come down to a relatively low number as stock price has declined. A couple of "value" funds are owners, although they seemed to have reduced their positions: lionshares.com LBY is a glassware/dinnerware company. To me, aren't these companies one step up from steel producers? Like every country in the world manufactures and tries to export the stuff? So how can margins and growth be there for LBY? Acquisitions is a weak way imo. And maybe there's been more debt taken on. (Of course ROE is enhanced as those additional profits that are brought in by using debt are placed over the equity denominator.) I've bought a little. A bet on LBY based on its ROE and profit margins vs. its seemingly low price. Too many unanswered questions regarding their business though for me to do more than have an exploratory position. Paul Senior