Comments on: Stock Tools – Intrinsic Value http://www.grahaminvestor.com/2009/06/10/stock-tools-intrinsic-value/ Intelligent Value Investing Thu, 12 Jan 2012 23:17:07 +0000 hourly 1 http://wordpress.org/?v=3.3.1 By: bradh http://www.grahaminvestor.com/2009/06/10/stock-tools-intrinsic-value/comment-page-1/#comment-116 bradh Tue, 01 Feb 2011 00:50:02 +0000 http://wp.grahaminvestor.com/?p=349#comment-116 If you rearrange the intrinsic value calculation you can compute the P/V ratio from PE and PEG. P/V = 1/ (8.5/PE + 2/PEG) The median PEG for the market (according to fidelity) is 0.7. From this one can see that even if the PE is large, the limit of P/V for a PEG of 0.7 is 0.35. By this measure alone the market is very undervalued. I'm struggling with what to make of this and how useful intrinsic value really is, or am I missing something. If you rearrange the intrinsic value calculation you can compute the P/V ratio from PE and PEG.

P/V = 1/ (8.5/PE + 2/PEG)

The median PEG for the market (according to fidelity) is 0.7. From this one can see that even if the PE is large, the limit of P/V for a PEG of 0.7 is 0.35. By this measure alone the market is very undervalued. I’m struggling with what to make of this and how useful intrinsic value really is, or am I missing something.

Like or Dislike: Thumb up 0 Thumb down 0

]]> By: Giuseppe Grillea http://www.grahaminvestor.com/2009/06/10/stock-tools-intrinsic-value/comment-page-1/#comment-114 Giuseppe Grillea Mon, 24 Jan 2011 22:44:20 +0000 http://wp.grahaminvestor.com/?p=349#comment-114 Thank You for this great web site, it's a great resource for those of us new to value investing. I was wondering if anybody out there could solve this arbitrage question... I don't have a position (though I would love to). Northern Foods (in the process of being acquired in the UK) today it went up 17% matching the merger offer of Mr. Boparan (Chicken ticoon who supplies Tesco). Northern Food is currently the subject of takeover war between Mr. Boparan and Greencore. Nothing fancy here, Friday evening they announced their offer and pronto on Monday arbitrageurs in the UK went and bought the stock matching the offer. Here is the question. Northern Foods trades very thinly in the Pink Sheets, OTC Grey Market here in the US. (Some days there is no trading at all, in fact at Vanguard they told me the last trade in the US took place nov 29th 2010). Today there was no movement whatsover in the price of the OTC. I contacted the OTC here is their answer: From: "Issuer Services" Sent: Monday, January 24, 2011 7:28am To: "Giuseppe Grillea" Subject: RE: OTCIQ Information Request Giuseppe, It looks like some shares were brought into the US and started trading. This could be with or without the consent of the company. You may want to contact them to see if they extend voting rights to these US shares. Regards, Issuer and Information Services What is going here? Is it possible that this has been overlooked by investors? Feel free to email in private . Thank You for this great web site, it’s a great resource for those of us new to value investing.

I was wondering if anybody out there could solve this arbitrage question… I don’t have a position (though I would love to).

Northern Foods (in the process of being acquired in the UK) today it went up 17% matching the merger offer of Mr. Boparan (Chicken ticoon who supplies Tesco). Northern Food is currently the subject of takeover war between Mr. Boparan and Greencore. Nothing fancy here, Friday evening they announced their offer and pronto on Monday arbitrageurs in the UK went and bought the stock matching the offer.

Here is the question.

Northern Foods trades very thinly in the Pink Sheets, OTC Grey Market here in the US. (Some days there is no trading at all, in fact at Vanguard they told me the last trade in the US took place nov 29th 2010).
Today there was no movement whatsover in the price of the OTC.

I contacted the OTC here is their answer:

From: “Issuer Services”
Sent: Monday, January 24, 2011 7:28am
To: “Giuseppe Grillea”
Subject: RE: OTCIQ Information Request

Giuseppe,

It looks like some shares were brought into the US and started trading. This could be with or without the consent of the company. You may want to contact them to see if they extend voting rights to these US shares.

Regards,

Issuer and Information Services

What is going here? Is it possible that this has been overlooked by investors?

Feel free to email in private .

Like or Dislike: Thumb up 0 Thumb down 0

]]> By: Jim Allen http://www.grahaminvestor.com/2009/06/10/stock-tools-intrinsic-value/comment-page-1/#comment-108 Jim Allen Mon, 03 Jan 2011 06:00:38 +0000 http://wp.grahaminvestor.com/?p=349#comment-108 Real estate appraisers use three different methods of analyzing and forming an opinion of value, which is all an appraisal is. The three approaches are the replacement value method, what it would cost to recreate the property as is, factoring in depreciation of improvements, the comparable sale method, looking at recent sales of comparable property and making adjustments for the variations, size quality, appeal etc of the improvements, and the income method, most often used in appraising commercial or income properties by determing the actual or expected income and assigning an appropriate multiplier (called the "cap rate" or capitalization rate) to that actual or expected income. These three approaches can give result that are tightly grouped or widely spread out. From these the appraiser forms an opinion of value. In value investing, perhaps the equivalent is the P/E ratio (the income approach), intrinsic value (perhaps analogous to the comparable approach), and book value (perhaps a "replacement value equivalent). Some adjust book values by examining the assets on the balance sheet and making adjustments for liquidating values, removing intangibles, adjusting for peculiarities of GAAP, etc. These are all judgment calls, somewhat subjective, but designed to help form an opinion of real value, in which the appraiser has real confidence, which can then be compared to the price to determine further action. Real estate appraisers use three different methods of analyzing and forming an opinion of value, which is all an appraisal is. The three approaches are the replacement value method, what it would cost to recreate the property as is, factoring in depreciation of improvements, the comparable sale method, looking at recent sales of comparable property and making adjustments for the variations, size quality, appeal etc of the improvements, and the income method, most often used in appraising commercial or income properties by determing the actual or expected income and assigning an appropriate multiplier (called the “cap rate” or capitalization rate) to that actual or expected income. These three approaches can give result that are tightly grouped or widely spread out. From these the appraiser forms an opinion of value.

In value investing, perhaps the equivalent is the P/E ratio (the income approach), intrinsic value (perhaps analogous to the comparable approach), and book value (perhaps a “replacement value equivalent). Some adjust book values by examining the assets on the balance sheet and making adjustments for liquidating values, removing intangibles, adjusting for peculiarities of GAAP, etc. These are all judgment calls, somewhat subjective, but designed to help form an opinion of real value, in which the appraiser has real confidence, which can then be compared to the price to determine further action.

Like or Dislike: Thumb up 0 Thumb down 0

]]> By: David Wei wang http://www.grahaminvestor.com/2009/06/10/stock-tools-intrinsic-value/comment-page-1/#comment-88 David Wei wang Sat, 02 Oct 2010 09:05:32 +0000 http://wp.grahaminvestor.com/?p=349#comment-88 Very nice site! I benefitted a lot from your insights.thanks! However I have a different opinion on this matter, I mean we can't do the individual stock picking just based on a couple of numbers and so called intrinsic formula, which is totally a guess work! Everything you are talking about is about future,if we go back Graham's book,the security analysis,he always pointed it out that the trend is not destiny,the everlasting upward trend of a company,no matter it is a 57% or 5 %, neither of them are fixed or guaranteed, so based on sound logic it's not a matter of big numbers or small numbers, it is about on either present or future you are focusing. Very nice site! I benefitted a lot from your insights.thanks!
However I have a different opinion on this matter, I mean we can’t do the individual stock picking just based on a couple of numbers and so called intrinsic formula, which is totally a guess work!
Everything you are talking about is about future,if we go back Graham’s book,the security analysis,he always pointed it out that the trend is not destiny,the everlasting upward trend of a company,no matter it is a 57% or 5 %, neither of them are fixed or guaranteed, so based on sound logic it’s not a matter of big numbers or small numbers, it is about on either present or future you are focusing.

Like or Dislike: Thumb up 0 Thumb down 0

]]> By: The Graham Investor http://www.grahaminvestor.com/2009/06/10/stock-tools-intrinsic-value/comment-page-1/#comment-35 The Graham Investor Sun, 07 Feb 2010 01:44:10 +0000 http://wp.grahaminvestor.com/?p=349#comment-35 Hi, Michael: Please see this <a href="http://www.grahaminvestor.com/articles/how-to/finding-undervalued-stocks-3-using-intrinsic-value/" rel="nofollow">description of the intrinsic value calculation</a>. I use the term "Forward" to imply intrinsic value going forward, since we use the analysts' estimated growth figure for the next 5 years. Hi, Michael:

Please see this description of the intrinsic value calculation.

I use the term “Forward” to imply intrinsic value going forward, since we use the analysts’ estimated growth figure for the next 5 years.

Like or Dislike: Thumb up 0 Thumb down 0

]]> By: michael kindred http://www.grahaminvestor.com/2009/06/10/stock-tools-intrinsic-value/comment-page-1/#comment-34 michael kindred Wed, 03 Feb 2010 19:56:50 +0000 http://wp.grahaminvestor.com/?p=349#comment-34 I noticed a heading in one of your screens, entitled "Forward Intrinsic Value". What is this and how do you calculate a forward intrinsic value for a stock? You have a great, informative site. Thank you, Michael Kindred Dallas, TX I noticed a heading in one of your screens, entitled “Forward Intrinsic Value”.
What is this and how do you calculate a forward intrinsic value for a stock?
You have a great, informative site.
Thank you,
Michael Kindred
Dallas, TX

Like or Dislike: Thumb up 0 Thumb down 0

]]> By: Joe Duggins http://www.grahaminvestor.com/2009/06/10/stock-tools-intrinsic-value/comment-page-1/#comment-17 Joe Duggins Mon, 24 Aug 2009 16:58:57 +0000 http://wp.grahaminvestor.com/?p=349#comment-17 A surprisingly insightful article. I generally agree. The hardest part of picking the entry and exit prices for stocks is determining the true value. I wish there was historical fundamental data like technical info. --------------------------------------------- Money without intelligence is like a car without a road. http://www.intelligentinvestingtips.com A surprisingly insightful article. I generally agree. The hardest part of picking the entry and exit prices for stocks is determining the true value. I wish there was historical fundamental data like technical info.

———————————————
Money without intelligence is like a car without a road.
http://www.intelligentinvestingtips.com

Like or Dislike: Thumb up 0 Thumb down 0

]]>