Intelligent Investments: NCAV Stocks

Friday, January 12, 2007

NCAV Stocks

I have been tracking NCAV stocks which are stocks that are trading below there net current asset value. Basically, you subtract total liabilities from current assets and then divide that by the float and if the stock is trading below that figure, it considered a deep value stock. This philosophy was tauted by Benjamin Graham, the father of value investing, in his landmark book, The Intelligent Investor- the basis for the name of this blog.

A great resource to find these types of stocks is grahaminvestor.com/screens. This site is updated daily with the 20 most undervalued stocks based on their float. Now, I would caution about flat out investing in such securities without serious investigation beforehand. Many times, there is a legitimate reason why they are trading at such discounts.

UP 1% today. Oil finally rebounded and boosted my energy fund 2.86% along with a new position that I hope I caught on its low, Bronco Drilling. BRNC has a high correlation to oil, almost .94 according to Bloomberg. I am probably one of the few hoping for $80 oil again.

2 comments:

Anonymous said...: Hi There Stock Speculator,
Like you I am interested in seeking out value companies to invest in for either the long or short term. Buying dollars for nickels has always appealed to me!! Anyway I was wondering what brokerage firm you use to place your orders. Would you recommend them? I probably would not be trading too frequently so minimum trades would not really be cost effective. Like you I am in my mid-twenties and would like to accumulate some sort of value porfolio with a mix mutual funds, index funds and independant stocks of my choice. Any correspondance would be greatly appreciated,
Tom. FL
regantj@comcast.net; January 15, 2007 at 10:10:00 AM PST
Anonymous said...: hiya

just registered and put on my todo list

hopefully this is just what im looking for, looks like i have a lot to read Im trying to find a way to build an e-mail list.; September 4, 2010 at 5:02:00 AM PDT

Buffett's Value Formula (?)

Warren Buffett hasn't exactly published his formula for what he calls the intrinsic value of a company, but he has dropped a number of hints. He apparently multiplies estimated future earnings by a confidence margin between zero and a hundred percent (a bird in the bush being worth 0.5 birds in the hand, and all that; bush birds are the earnings you hope for, and hand birds are the earnings you're confident will materialize). He then compares these probable earnings with something he has total confidence in, by using a U.S. treasury yield as his discount rate. In calculator form it looks like this:

This calculator doesn't use fancier math than the original one did. Its advantage is that it forces you to be explicit about your earnings expectations. It also automatically provides you with a hard-headed investment strategy: always invest in government bonds, unless you can find something else you are confident will yield more cash.

One other hint that Buffett has dropped over the years is that he can estimate value in his head in about five seconds; so whatever he does he keeps it simple, slugger.