Intelligent Investments: EWEB and MHJ Boost

Tuesday, November 28, 2006

EWEB and MHJ Boost

Just hours after I purchased 950 shares of EWEB at 2.08, the stock jumped more than 11% on no news. It looks as if a large market order was entered this morning that punched through several layers of limit sell orders up to $2.76 at one point. Then some profit taking took place and the stock slowly retreated down to $2.31.

This morning around 9am, I entered a limit order for Man Sang Holdings (MHJ) for 400 shares at $4.51. I checked around lunchtime and found that my order had been filled and that also the stock was up almost 12% before settling near 4.94. Still a nice 10% gain in only a few hours.

Overall the portfolio performed well gaining 0.37% ($920.14) outperforming the S&P500 and the Russell 1000.

No comments:

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.