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

To: Jurgis Bekepuris who wrote (45504)	11/16/2011 2:40:57 PM
From: J Mako	Read Replies (1) \| Respond to of 78666

I will treat Goodwill differently. Unlike tangible assets (e.g. a machinery) and intangibles (e.g. a broadcast license), goodwill is not some capital locked inside the business in order to generate the profit. What if I were to rewrite GAAP and say: instead of creating a goodwill entry in the book, you need to treat that portion of the acquisition cost as an expense paid to the business seller when you acquire a buisness? If you look at it that way, goodwill should be subtracted when calculating ROE.

To: Jurgis Bekepuris who wrote (45504)	11/22/2011 11:03:49 AM
From: Jurgis Bekepuris	Read Replies (2) \| Respond to of 78666

I took a look at current HPQ results. Taking 2011-yearly results, the stock is not very cheap, considering the increase in debt and pretty low ROIC. I did not use just Q4 results, which are bad from earnings perspective. Sales held up though. HPQ is cheap on PSR basis if people can make an argument that management will stop doing stupid things, will pay off debt and will go back to generating decent earnings. I will pass at this time. I might be interested at ~$19 or so, but I doubt it will get there.