Strategies & Market Trends | Fundamental Value Investing


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To: bruwin who wrote (1709)1/12/2012 1:22:49 PM
From: Dr_of_Microcaps   of 3034
 
Is it 'Under-Valued, Fairly-Valued or Over-Valued" based on this?

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To: Dr_of_Microcaps who wrote (1710)1/12/2012 2:57:09 PM
From: bruwin   of 3034
 
Market capitalization represents the public consensus on the value of a company's equity.
In a public corporation, ownership interest is freely bought and sold through purchases and sales of stock, providing a market mechanism which determines the price of the company's shares. Market capitalization is defined as the share price multiplied by the number of shares in issue, providing a total value for the company's shares outstanding.

I don't see how it can do any more than what is described above.

If you don't agree I'd be interested to know why you don't.

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To: bruwin who wrote (1711)1/12/2012 3:00:06 PM
From: Dr_of_Microcaps   of 3034
 
So does it mean its a "Buy, Sell, or Hold"?

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To: Dr_of_Microcaps who wrote (1712)1/12/2012 3:12:20 PM
From: bruwin   of 3034
 
I don't base my Buy, Sell or Hold decision on the size of a company's Market Cap. Multiplying a share price by the number of outstanding shares tells you nothing about the relevant fundamentals of a company.

IMO, there are far more relevant and pertinent criteria to interrogate about a company in order to make those decisions. Reference to several of those criteria can be found in my Board's header.

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To: Dr_of_Microcaps who wrote (1712)1/12/2012 4:27:32 PM
From: E_K_S2 Recommendations   of 3034
 
Schnitzer Steel Industries, Inc (SCHN) -Nasdaq

If this was the stock you were looking at for a fair value estimate then the Graham No provides $58.81/share which is 33% below its current price of $44.28.




The GN is just a starting point for me. Tangible BV is better than the stated BV, I used the YAHOO BV of $ 39.93/share. You really want to pull out goodwill and other non-asset figures. For earnings per share I used $3.85/share. You could use the analysts estimates for 2013 of $5.09 but for me that is too far out especially in a cyclical business like steel production. That moves the GN much higher to $67.62/share.

The steel industry is a cyclical business and wide price swings during the multi year cycle is not unusual. The GN assumes that the BV remains constant or grows over time. The basic assets for steel companies generally fall into this category unless there is some disruptive new technology for producing steel.

I recently bought Gerdau S.A. Common Stock (GGB) -NYSE . I choose GGB because they are a low cost "world" producer and will be the preferred vendor of steel for the 2016 Olympics (to be held in Brazil). At the time GGB was selling for $8.20/share and their GN was $11.16. That revealed a 36% discount to it's GN fair value. I sold my previous shares in GGB in 3/2010 at $13.32. That represented a 242% gain from my buy 18 months earlier at $5.50/share.

Many times these stocks overshoot their GN fair value target and/or they continue to fall to new lows as the economic cycle worsens. Timing Buys and Sells are difficult. Therefore, I like to use the GN calculation as a way to alert me the company is selling more than 30% below it's GN fair value.

Hope that helps. Remember the Graham No is just a first start for determining Fair Value and does not work for companies that sell higher than 1.5x BV (tagible BV is better if you can calculate it) and/or has a PE higher than 15. You can smooth the earnings figure by looking at five year "average" periods. It's also good to see the BV per share increasing over that five year period too.

EKS.

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From: bruwin1/17/2012 6:24:32 AM
   of 3034
 
Romney & Huntsman.

I happened to be watching Sky TV when up came Huntsman's speech and disclosure that he was withdrawing from the Republican nomination race. My first thought was that this seemed quite early on in the proceedings for him to withdraw.

Then I thought about individual interviews and speeches that I'd seen recently regarding Romney and Huntsman. Romney with 'Charlie Rose' and Huntsman at debates, etc..
Purely from a "spectator perspective" I got the impression that these two looked as if they could possibly work together and maybe form a strong alliance that could appeal to a broader section of the voting public.

Putting that together with Huntsman's early withdrawal, I suddenly wondered if, maybe, Romney and Huntsman had gotten together behind the scenes and maybe Romney, who now appeared to be the stronger candidate, had offered Huntsman the position of Vice President should Romney be elected ahead of Obama.
In his withdrawal speech, Huntsman also said the following, "Despite our differences and the space between us on some of the issues, I believe that candidate (best equipped to defeat Barack Obama) is Gov. Mitt Romney,"
For one thing, Huntsman probably brings more foreign policy experience to the partnership, in an area, apparently, that Romney is not strong in. Huntsman knows all about China, which is a very important and strategic part of the world.

Anyway, that's just my thought on the subject.
I'm certainly no 'expert' on the US political scene, and I could very well be way off the mark !!

Of course, if that is the way things turn out, then I could always say, "I told you so", (with VERY MUCH tongue in cheek) !!! {:-)

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To: bruwin who wrote (1713)1/18/2012 12:09:33 AM
From: Dr_of_Microcaps   of 3034
 
Then what does future PE's?

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To: Dr_of_Microcaps who wrote (1716)1/18/2012 4:45:07 AM
From: bruwin   of 3034
 
I'm afraid you'll have to elaborate on your question. I'm not sure what you're asking.

You appear to, generally, be someone of few words !! {:-)

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To: bruwin who wrote (1717)1/18/2012 12:57:57 PM
From: Dr_of_Microcaps   of 3034
 
Just what I posted, what does it mean?

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To: Dr_of_Microcaps who wrote (1718)1/18/2012 2:51:30 PM
From: bruwin1 Recommendation   of 3034
 
What does what mean ?

You stated, "Then what does future PE's?"

I assume your "PE" refers to the Price to Earnings ratio ?

Can you not be less obtuse in your query.
I'm more than prepared to make an attempt to answer a question, but the question itself needs to be reasonably clear and unambiguous.

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