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To: petal who wrote (68322)8/13/2021 2:20:36 PM
From: E_K_S
1 Recommendation   of 69656
 
Always important to look under the hood.

I use 'tangible' BV when I can. That excludes Goodwill and/or other worthless assets. Also remember some assets may be a liability; pending litigation (think asbestos) or environmental contaminated real estate.

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To: Elroy who wrote (68323)8/13/2021 2:57:03 PM
From: Paul Senior
1 Recommendation   of 69656
 
Ok, I clarify. This is what I believe you are saying:

"I think it -- (a value stock) -- has have a low price to (adjusted) book value relative to the market (S&P 500) or relative to its peers. Relative To the market is a pure value stock, relative to its peer group means it’s the value stock in its peer group."

Which, for me, means it's unactionable because what you want it "relative" to is too nebulous or arbitrary essentially.

====

If you look at 2x book value for one company vs 5x for a similar, you'd want to find out why there might be such a disparity. Example.. But I can't figure this out myself now... plumbers in the house- some commotion... could a 5x bv company with no debt and earning what the 2x book company earns that has a ton of debt, possibly actually be the better value? Plumbers calling... gotta go.

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To: Elroy who wrote (68324)8/13/2021 2:57:57 PM
From: petal
   of 69656
 
As I usually invest in technology stocks, the value of the company is often in the brains of the engineers, and it's not on the balance sheet. So....I'm not really a value investor.
Oh, well, yeah, that's a completely different story indeed. To get back to the initial dichotomy of this discussion, I would characterize tech as the epitome/archetype of a growth stock. Or maybe even further out on the spectrum – possibly "dream stock" or "utopian stock" is a better name (since any ol' company can be a growth stock temporarily, if the industry is temporarily hyped – the recent example of sneakers being a good one).

While paying three digit PE's for "old economy" stocks makes no sense to me (since prolonged growth seems more or less impossible), paying top dollar for a tech co "which one thinks one knows something about, and in the management of which one thoroughly believes" seems proper, since the upside potential is so massive if one's judgment is good. In that sense, the mindset isn't really different from value investing! The only difference being that in the one instance, price has to catch up to (future) value, while in the other, (current) value has to catch up to price. In theory, shouldn't be much difference. In practice/reality, however, it seems to be easier to spot cheap current value than discounted future value. More investors have become rich that way (AFAIK).
I just like to talk about stocks, any stocks!
I certainly can relate to that :-)

As a tech investor, what do you thing about Twitter? That is my ONLY growth/tech stock :-)

(Maybe reply in DM if you want, so as not to clutter the thread with OT.)

I trade much less than others here.
That makes sense – I think tech stocks are probably the ones where a buy-and-hold strategy is most apt.

There is no one perfect trading/investment strategy – always interesting to hear about the style of others, and especially that of the regulars of this board. (One can learn a lot simply through listening...) Thanks for sharing yours!

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To: Elroy who wrote (68323)8/13/2021 3:16:00 PM
From: petal
   of 69656
 
(accidental double post)

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To: Elroy who wrote (68323)8/13/2021 3:18:05 PM
From: petal
   of 69656
 
I think a value stock is defined by it's "assets" being undervalued relative to some group - S&P 500 perhaps, it's peer group of stocks (staples, semiconductors, whatever) perhaps.
I largely agree with that. I also largely agree with Paul Sr's "value relative to itself" measure. (I think that both "relative to sector" and "relative to itself" can be useful for screening purposes. However, P/B is IMO a too subjective/blunt a ratio to be used for trading decisions when comparing to sector.)

However, I don't think P/B alone is enough by far to determine whether or not it's a value stock. There are other key ratios (P/E, EBIT/EV, P/CF's, etc etc) that I think are way more important. Also, I disagree on that a value stock has to be undervalued based on its assets alone (if that's what you mean) - their earnings can be underrated too. (Of course, their assets too, in a way, or will become...)
But P/B can be a rough guide, sure. Not least in absolute terms (i.e. compared to nothing) -- P/B < 1 = high probability of value.
For trading decisions - which you seem to have agreed on already - P/B comparisons to others is probably not that useful (better to see how price and earnings have moved relative to industry competitors, e.g.)

P.S. Good banter guys

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To: petal who wrote (67179)8/13/2021 3:53:05 PM
From: E_K_S
   of 69656
 
Re: SEOAY

You made a pretty good call 6/2021 at $17.85/share +13% in less than 3 months. These were shares I bought back that I previously sold at $19.25/share 12/2020.

No plans on selling any of these shares as I believe they will go higher as PE=12.8 and relatively low debt Debt/Equity=0.42



Do you have a Fair Value Price target? I say $29/share or 20x 2022 estimates now at $1.48/share


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To: E_K_S who wrote (68330)8/13/2021 4:28:35 PM
From: petal
1 Recommendation   of 69656
 
Probably just luck, in that case :-) Not statistically significant :-) Indeed, otoh, the post you replied to here was pretty much at today's price, and near last top.

I'm decent at getting in near bottoms and selling at tops – sometimes. Other times I get confused. This time, I sold because of lumber prices falling like stone while Enso's stock price remained relatively unaffected. I thought I got out "ahead of the curve", and probably felt quite clever. Of course, that was the exact wrong time to sell (everybody else probably thought exactly as I did.)

Last two buys below are June 8th and 11th, last sell June 28th. I'm not quite sure why I thought it possibly attractive in April as I appeare to have sold March 29th. Maybe I'd missed quite how far lumber had rallied, or it's implications for Enso. (II think I hadn't realized quite how much RFP in particular had rallied, relative to Enso and that spiked my interest anew, prompting an eventual buy in June before changing my mind again as lumber crashed.)



________________________________________

________________________________________





Last sell:




Well, at least lumber kept falling...

I don't own it in any account currently, as it seems to me that this lumber cycle is spectacularly over. (Or is it BTC 2018...? ;-)

Btw, my screener says P/E 19,5: borsdata.se

Also only 4,5 % EV/EBIT Earnings Yield (the "Greenblatt number") P/FCF of around 20, DY of only 1,8 %... At this point it does not seem cheap to me. I'd rather buy Norwegian co. Orkla (ORKLY) at roughly equal valuation. (Completely different business though :-))

Or Sell Enso, and then use proceeds to buy lumber directly in a little while (everyone has cut down their trees, and it takes a long time to grow it back (but then again I guess there's still some forest left standing though :'D))

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To: Paul Senior who wrote (68326)8/13/2021 5:06:11 PM
From: Elroy
1 Recommendation   of 69656
 
Which, for me, means it's unactionable because what you want it "relative" to is too nebulous or arbitrary essentially.

"Unactionable" means??

The simplest way to think of it would be the take the average Price to Book Value of the 500 S&P 500, and all of those with a Price to Book below that average could be your basket of "value stocks" and the rest would not be value stocks, as their price to book is above the S&P 500 average.

You can decide what actions to take now that you have segmented the S&P 500 into value stocks and not value stocks. For example, if you want to own value stocks, you could buy all of the value stocks in 2x size relative to their position in the S&P 500, and not own the S&P 500 stocks which have a higher than average price to book, and then hope that your value portfolio beats the index.

The definition of value stock doesn't itself give you an action to take, it's just a way to categorize stocks, one of many ways. Once you've categorized them, you gotta decide what actions you want to take.

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To: petal who wrote (68327)8/13/2021 5:07:42 PM
From: Elroy
   of 69656
 
No opinion on Twitter. I don't even tweet.

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To: Elroy who wrote (68332)8/13/2021 6:30:23 PM
From: Paul Senior
   of 69656
 
"For example, if you want to own value stocks, you could buy all of the value stocks in 2x size relative to their position in the S&P 500"

I'm looking to make a decision on stocks that cross my path, not buying a segmentation of the market.

You're talking theoretical/conceptual. I'm trying to deploy money in actuality.

=========

What do I mean by actionable/not actionable:

Trying to find an example. I see I mentioned TPC, so I looked.

Is it a value stock? It falls below the mean/median for S&P for price/book value
It falls below 1x book value.

Does that make it anywhere near close to a buy? Nothing special that maybe hundreds or thousands of other stocks will similarly exhibit regarding p/bv.

Is it a value stock based on peer group price/book value?

What is its peer group? Well, here's something I've learned. I do have access to this information, at least somebody's idea of it. It's in Gurufocus.

Price-to-Tangible-Book ranked better than 83.24% of 1420 companies in the Construction industry.Industry Max: 257.09, Med: 1.3, Min: 0.03. TPC: 0.57


So what can be done with this information? I guess the only action would be to look for further information, further metrics. Would anybody buy the stock on the above ranking? Basically, I as an investor looking for a buying opportunity, have found nothing to tempt me, with all of the above. A waste of time.

Now let's consider TPC's p/tangible book by itself. Using tangible bv because it's available:

Price-to-Tangible-Book range over the past 10 years Min: 0.23, Med: 1.29, Max: 5.92 Current: 0.57


Further, if we look at TPC p/tangible bv over each of the past 15 years, the price/tangible bv has not ever been as low as it is now. A negative though, is that it has been declining in each of the past four years. Otoh, a positive is that tangible book value itself has grown from about $21 to $24 per share.

What to make of this. For everybody else on the thread, I presume it's a "so what -- no interest". For me though I see a good possibility of TPC being a reversion-to-mean play. In past good years this $14 stock has traded at higher prices and a p/tangible book value twice what it is now. Based on my looking at price/tangible bv numbers and its history here, I am willing (and have) bought the stock. It's actionable and I acted. Just a small bet. Not a stock I recommend to anyone, but for me, I believe an appropriate action based on metrics and position size I like.

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