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

To: bruwin who wrote (21599)	7/6/2005 11:22:03 AM
From: MCsweet	Read Replies (1) \| Respond to of 78765

Bruwin, Several OTC stocks qualify as value stocks. Paul has recommended MHCO.PK, and it has done quite well (more than doubled for me). In the case of VELTEX (VLXC.PK), I think the stock is a scam. However, there are occasional opportunities in these type of stocks, and Paul is not pumping and dumping the stock, so I think it is ok to mention here. I just wouldn't recommend anyone buy this particular one. Second, book value is book value --- value of assets/liabilities at historical cost with trading assets at current market value (inventories lower of cost or value). Study some basic accounting for a definition. The only real twist is that some people use tangible book value, which subtracts things like goodwill. Read classic value books by Benjamin Graham, David Dreman, etc for the relevance of Price/Book, but the bottom line is that Price/Book is one of the best-performing value attributes to use for screening stocks. MC

To: bruwin who wrote (21599)	7/6/2005 1:01:06 PM
From: Paul Senior	Read Replies (2) \| Respond to of 78765

P/book: I use price to book value or p/bk or p/b.v. because it has been proven to work, and value investor professionals who seem successful to me use it. Dreman, Frank, Dorfman, and an army of other value investors and researchers have done study after study on this subject. Here are two internet related sites: tweedybrowne.com books.global-investor.com I use stated book value/sh. It is generally the stockholder equity part in the eqation divided by outstanding shares. I generally do not use tangible book value. Tangible book value is often (depending on one's definitions of tangible) a more conservative number because it does not include goodwill. Many people believe tangible book value is a better number and a more realistic or solid number to use when looking at what should comprise book value. I use stated book value/sh. because it's an easy number to screen for. Also, I'm interested in comparatives, for example, year over year changes. So as long as book value definition is consistent, I find for my purposes, stated book value is okay. I don't ignore tangible book value if I come across it - it can provide additional information about margin of safety. Similarly, if I become aware of off-sheet liabilities (some types of leases, special purpose entities, etc.), I'll qualitatively consider such in my overal evaluation of the company. I usually don't search through 10K's though for such items. And as you imply, bruwin, we'd be talking industrial companies and the like. For service companies, tech companies, etc., book values and p/bk numbers may not be significant as value determinants.