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: bruwin who wrote (55724)	7/24/2015 5:53:11 PM
From: IndependentValue	2 Recommendations Recommended By Jurgis Bekepuris MCsweet Read Replies (1) \| Respond to of 78742

Bruwin, you make some interesting points, but I'd suggest some counter-points: Yes, maybe EJ Eliot is an a---hole, etc.., etc... BUT, IMO, one is in the stock market business to make a return on one's investment, irrespective of the character/personality of directors et al. Agreed, but unfortunately the behaviour of management and/or other shareholders (and frequently owner-managers) often adversely impacts the potential for one to make a return on investment. Think Jeffrey Skilling or I also think the inverse of this is true - one frequently invests on the strength of a manager or influential owner's character - Buffett, Steve Jobs, John Malone etc. I think are all examples of this. Indeed part of the value of a stock can be embedded in the ability of that owner/manager/director to drive the business forward and create value, resulting in growing intrinsic value in the future. Your point on financial evidence is an important one also - often stories are built up around stocks simply because they are cheap (less than BV etc.); usually there is a good reason for this. Finding the evidence by doing ones homework is critical in determining whether there is any real value. And, personally, I wouldn't get too hung up on whether or not Asset/share is greater or less than share price. A shareholder gets no real benefit from that calculation unless the company gets liquidated and those "Assets" realise their stated book value, and that value gets distributed to existing shareholders. But there again how often does one hang around until a company gets liquidated ? I'm inclined to disagree with you here. Asset value, or perhaps more specifically book value adjusted for market values of various assets e.g. property etc is a useful metric for investors, particularly if market cap is below this number. If the business has good prospects, and is a viable going concern, but trading below liquidation value this is entirely illogical and serves as a useful indicator of value to an investor. Its not necessarily about hanging around until a company gets liquidated - it simply suggest there is real value and market inefficiency that can be taken advantage of. If the business has good prospects, or improving operations, or there is an identifiable catalyst (which may well be simple sheer value itself), value is usually realised in time as other investors (Mr. Market) discovers the opportunity. A good value proposition rarely remains undervalued indefinitely.