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

To: SI Bob who wrote (29382)	12/22/2007 12:50:55 PM
From: Paul Senior	Respond to of 78475

NWLIA I originally bought NWLIA because the p/bk at the time was lower than the average p/bk. Something like .6 vs. avg. .7 or more (I don't recall), and because the p/bk rose every year that I saw. P/bk on any day that I've held the stock never reached 1.0 until this year. When it dropped to about .8, I just decided I'd add a few more shares on the assumption if it could trade finally at 1x once, it can (and maybe will) do it again. Perhaps wrong logic. Reversion-to-top instead of reversion-to-mean. haha. Maybe too, I was feeling sorry for myself that I didn't make any sells when stock hit p/bk =1 . So I added a bit in hopes that stock would see those days again. Same story for me this year for the other Moody-family dominated insurer ANAT, which also surpassed p/bk =1 for the first time in years I've held it. With insurers, I always check p/bk first thing. Several insurers come right out and say increasing book value is a goal for them and that is how they want to be measured. In private market valuations - takeovers - it's often seen that the price paid is reported as a multiple of bv, e.g. a takeover at 1.5xbv. or 2xbv. I like to look at historical p/bk figures to see how these stocks might trade. You could say (and be right)that my add this year of NWLIA was expensively bought at p/bv of maybe .8 or slightly less. With an insurer like MKL though,(which I hold), the stock price is about $476, and I'm looking to add at about $460/sh where the p/bk would be about 1.6-1.7xp/bv (on some reasonable estimate of forward earnings and associated higher bv. next year). Such a price ($460) would suggest to me that for MKL, a p/bk of 1.6-1.7 is relatively low compared to MKL's historical average. (ie. whereas .8 is historically relatively high for NWLIA) Earnings (eps) come into the picture too. A lot of these insurers/reinsurers are trading at low p/e's and that ought to be factored into a buy decision as well. ENH is one for me. I'm just saying what I do and giving my opinion. Others should be doing what works for them.

To: SI Bob who wrote (29382)	12/26/2007 12:19:00 PM
From: Paul Senior	Read Replies (1) \| Respond to of 78475

I continue to add to car retailers. Today, buying a little more LAD. Recession fears, people tapped-out, expensive discretionary item, etc. etc. Somewhere there's a bottom to these stocks though. Maybe it's a lot lower than current stock prices. Still, on some measures, p/sales for example, (assuming sales might at least remain constant from this point), the stocks are small buys now, imo, for recovery in couple of years. LAD not particularly great, although showing profits in each of past ten years. Perhaps negatives specific to LAD might be too dependent on Western USA, too many domestic brands. Maybe too many Chrysler/Dodge stores. I don't know. lithia.com