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Questions tagged [value-investing]

Value investing generally involves buying securities that appear underpriced and selling securities that appear overpriced.

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Using “net cash provided by operating activities” in calculating owner earnings?

The concept of "owner earnings" is of course popular among value investors, being an adjusted net earnings that has non-cash deductions put back in, and maintenance capital expenditures (or one's best ...
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P/E & P/B of stocks purchased by Warren Buffett

I am looking for data about Warren Buffett's famous purchases. For e.g. when Warren Buffett purchased stock of Coke, American Express, Moody's & other of his long term purchases what was the P/...
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Shares issued vs Shares outstanding and where to find in morningstar.co.uk

When talking about stocks. I am a bit confused with the term "Shares issued" and "Shares outstanding". Can someone please clarify me what is the difference? Also I want to know where to find the ...
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2answers
306 views

Warren Buffet's calculation of the value of the company - very low discounting rate

I was read the book "The Buffett Way". The book claims that Warren Buffett uses a simple calculation to calculate the intrinsic value of a company. The regular way is to estimate future earnings &...
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1answer
32 views

A question about CAPEX when Calculating Free Cash Flow (FCF)

When performing the following to determine free cash flow: Free Cash Flow = Operating Cash Flow - Capital Expenditures Do I include only Capital Expenditures (13,732 in the example below), or do I ...
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2answers
127 views

Allocation basics not so basic [closed]

I've been trying to put together a long-term (15-20 years) ETF portfolio (stocks only, no bonds). As I read about the investment and allocation basics, I realized it's far from simple. I would like my ...
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71 views

What are the possibly routes of gaining investors for a large land purchase with intent to subdivide and sell?

I frequently find large plots of land (100+ acres) for sale at prices well outside of my ability to take out a bank loan on. The plots of land when sold as one large plot, are generally listed at a ...
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7answers
510 views

Why would any owner sell their company to Warren Buffet / Berkshire Hathaway?

Suppose that I'm either an owner or part owner (through shares) of Example Corporation. One day I get a phone call from Warren Buffett. He says that Berkshire Hathaway is interested in buying ...
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How did Theranos have any value at all?

Theranos, an infamous case of a tech startup gone bad, was valued at over 9 billion dollars for audacious claims of revolutionizing the blood-testing industry. The trouble is, it had done so with ...
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120 views

Simple deferred annuity question [closed]

Your friend is considering investing $8,000 at the end of every quarter in a bank account paying 9% per annum. The first contribution will be made at the end of the first quarter. If interest is ...
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2answers
6k views

What does “gold reserves” on a gold mining company's balance sheet mean?

From a Reuters article: On Wednesday, [Newmont Mining Corp] reported gold reserves of 68.5 million ounces for 2017, unchanged from 2016, as it replaced reserves through exploration, projects, ...
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7answers
11k views

Why does Warren Buffet consider real estate as productive asset?

In Berkshire Hathaway 2011 letter, Buffet said that: My own preference – and you knew this was coming – is our third category: investment in productive assets, whether businesses, farms, or real ...
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Value stocks appreciating

A value stock bought when undervalued should presumably increase in value and eventually is no longer a value stock. How long should this take and should it then be sold?
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When and where did Warren Buffett say: “Rule No.1: Never lose money. Rule No.2: Never forget rule No.1”?

Every woo-woo financial guru claims that Warren Buffett lives by this and said this at some point in time. When and where did this statement originally occur? What is the primary source?
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349 views

Take out a loan to invest

So, maybe a crazy idea. Let's say I take out a personal loan at my credit union with "0" to 4.5% interest with a payment I can afford from my personal income. Repayment over 5 years. I take the ...
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Discrepancy in table 2.1 Pg 49 in the book The Intelligent Investor by Benjamin Graham

Intelligent Investor Table 2-1 Pg 49 The above pic shows inflation at 5 years intervals. I am finding a bit hard to understand this table. For e.g. calculation of percentage rise in wholesale prices ...
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1answer
153 views

What is the math behind Buffett's 2015 Per-Share Investments figure for Berkshire Hathaway?

Multiplying the $159,794 figure by 1.6m shares gets me $262,541,542,000.00. Here's what I did to try and reproduce that figure (amounts in millions): My attempt Which is about 10 billion dollars off....
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5answers
7k views

Why does Warren Buffett say his fund performance, relatively, is likely to be better in a bear market than in a bull market?

Currently, I am reading his annual letter. In his letter, he always says that his fund performance is likely to be better in a bear market than in a bull market, but I don't know why. Could someone ...
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1answer
317 views

Should I subtract these costs to calculate the “Net Present Value”? [closed]

So now I know that in order to workout the " Net Present Value " I have to find the " Present Value " of each year.. And for that I need to find the revenue of each year .. However, when there are ...
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1answer
108 views

Where to start with finding good companies to invest?

I know its a general question but where do you start with value investing and finding undervalued companies? There must be a quick way to find a list of undervalued good companies? Thanks
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3answers
632 views

Do Fundamentals Matter Anymore in Stock Markets? [closed]

As a relatively new student to the market, and as someone who would inherently define himself as a value investor, I can't help but feel that current market conditions beg the question: do ...
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1answer
73 views

Why do some companies report how well their EBITDA performed even if their overall net profit did equally well?

I recall reading somewhere that Warren Buffet once mentioned that he avoided companies that reported EBITDA growth, and considered it as a "useless metric". Ok fair enough. I guess EBITDA could ...
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3answers
196 views

The Intelligent Investor: Northern Pacific Railway example

I am reading the revised edition of Ben Graham's THE INTELLIGENT INVESTOR (First Collins Business Essentials Edition, 2006) with commentaries by Jason Zweig. In chapter 7, "Portfolio Policy for the ...
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3answers
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Valuation of company based on earnings only?

I notice that a lot of valuation guidance, such as some online calculators, make company valuation a function of earnings. Therefore a company with small earnings (or no earnings) is valued at 0. For ...
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3answers
226 views

Comparing the present value of total payment today and partial payments over 3 months

I'm trying to buy something. I can either pay $2495 in a lump sum payment, or $997 over 3 x monthly installments. Let's say I can invest in the stock market and get an 8% return on my money. What's ...
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3answers
102 views

Should one only pursue a growth investing approach for Roth IRAs

I just opened a Roth IRA and I have been doing some research on what to invest in. I am going to be fairly aggressive considering my age and do a 90/10 stock/bond mix, but I do have one question, ...
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1answer
83 views

What are the risk of high dividend closed end index mutual funds ?

I am finally taking ownership of my retirement my very very small nest egg and I am looking to undertake a value based strategy when it comes to investing. I have been gravitating towards high ...
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4answers
270 views

Value investing

Does value investing work? More specifically, I've taken Dr. Damodaran's course on valuation (available online at his website) and have read parts of his textbook "Investment Valuation", and am coming ...
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1answer
338 views

Analyze a security using Benjamin Graham's Defensive Investor Criteria

I would like some help evaluating a security using Graham's Defensive Investing Criteria (Chapter 14 of the Intelligent Investor). As an example security, let's look at NYSE:MEI and each of the ...
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1answer
95 views

Isn't the subtraction of deprecation and amortization redundant in the calculation of Owner's Earnings?

I'm new to the world of Value Investing (and investing in general) and am trying to fully understand the fundamentals in calculating the Owner's Earnings of a company. According to this blog, Owner's ...
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3answers
99 views

Value vs Growth: are start-ups value companies or growth companies?

I'm a bit confused about the definitions of value and growth. I heard that companies that have high P/E ratios are growth companies. Are start-ups (think Silicon Valley start-ups, most of which fail ...
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2answers
187 views

High frequency trading

Do High frequency trading firm pay commission ? I get charged a hefty price just to place one trade, and yet these guys are placing thousand of trade each day or even more
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1answer
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US company Warrants issued in Europe

Can one bank issue another companies warrants ? I have been searching for warrants on US companies and turns out that a lot of these warrants are issued in Euro instead and by different banks rather ...
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95 views

What are some of the key identifiers/characters of an undervalued stock?

How do you identify an undervalued stock? PE? EPS? Book Value?
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1answer
540 views

Related Hedges (How do they work?)

I'm currently re-reading Benjamin Graham's book, The Intelligent Investor. In it (Chapter 15), Graham mentions some of the undertakings and operations his fund, Graham-Newman Corporation, was involved ...
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779 views

What Did Benjamin Graham Mean by Earnings Stability in The Intelligent Investor?

On page 386 it lists 5 criteria for stock selection for the enterprising investor. #2 is earnings stability - it reads "Earnings stability: No deficit in the last five years covered in the Stock Guide....
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2answers
583 views

Market Cap lower than Shares Outstanding x Share Price?

Why would the market cap for a company be lower than its shares outstanding x share price? Example: Meggitt trades at 544 a share with shares outstanding of 801,960,000. Their market cap is 4.37 ...
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What is intrinsic value of stocks with diluted voting power?

Recent technological companies went to IPO with publicly traded stocks that have 1/10th of voting power of the privately held stocks. Facebook, Google, GoPro are examples of such companies. Usually ...
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1answer
1k views

What is the Average Yield on High-Grade Corporate Bonds as of Now?

I am looking to update the formula used by Benjamin Graham to calculate a stock's intrinsic value. His most recent formula can be found at http://en.wikipedia.org/wiki/Benjamin_Graham_formula. The ...
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1answer
338 views

How to evaluate growth stocks

What are good metrics to evaluate growth stocks? I have been following the site buffettsbooks.com and it teaches you how to evaluate value stocks based on Warren Buffet's principles. These are ...
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Formula or model for value investing [closed]

I'm a programmer but I'm interested in investing. Are there formulas that are well known to determine if a company is undervalued? I want to go much deeper than the P/E ratio. I'm looking for ...
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4answers
1k views

Problems with Enterprise Value and better valuation techniques

Enterprise Value is often cited as a better measure of valuation than Market Capitalization. The formula for Enterprise Value starts with Market Capitalization and then adds debt and subtracts cash (...
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2answers
553 views

Assessing the value of an ETF

I recently read through Graham's The Intelligent Investor and am looking at what index ETFs or Index Mutual Funds it makes sense for me to invest in. As I was considering this I realized that, at ...
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2answers
337 views

How Warren Buffett made his money

Is there any authoritative treatise or publication or book or white paper that explores (with all the math included) that how Warren Buffett really made his money? Something that explores the facts ...
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2k views

Explanation on Warren Buffett's famous quote

What does Warren Buffett says in this article here "In the short term the market is a popularity contest; in the long term it is a weighing machine." What is the analogy with popularity contest ...
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3answers
16k views

If a company's assets are worth more than its market cap, can one say the shares must be undervalued?

Imagine a company sold a 10% stake in one of its assets to a 3rd party for $100 million. It would be fair to assume that the asset is worth $1 billion. If that company had 200 million shares issued, ...
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1answer
661 views

Learning investment--books to read? Fundamental/Value/Motley Fool [closed]

I am looking to learn how to invest better. Currently I follow the Motley Fool recommendations and have done quite well that way, but I'd like to educate myself better so that I can make better ...
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3answers
455 views

Benjamin Graham: Minimum Size of the company

In the book "Intelligent Investor", Graham recommends a minimum annual sales figure of 100 Million $ as one of the criteria. How do we adjust this figure for Inflation and a country other than the ...
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1answer
436 views

Is there a step-by-step procedure to find a security's intrinsic value?

Recently I was reading about different fundamental analysis approaches, and specifically about Value Investing, as proposed by Ben Graham and David Dodd. This approach describes a strategy which based ...
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6answers
33k views

Which Benjamin Graham book should I read first: Security Analysis or Intelligent Investor?

I recently graduated from engineering and I want to know more about investing. I'm particularly interested in Benjamin Graham's ideas. I want to read all of his books, but I couldn't decide which one ...