I think there are several possible interpretations open on his comment. One is that he is trying to say that price-to-book value is not useful as a value metric. The next is, as you point out, that it’s not counter-intuitive. The third is that replacement value is a better proxy for intrinsic value than book value. I think the third interpretation is the most likely, but it’s unrelated to the post or the line in the post he has quoted, which is why I was confused. It’s also possible that he didn’t intend any of these things, which is why I need him to elaborate so that I can understand what he was trying to say.

G

I am a fan of the F-score. I have not taken it up, yet, as a buy signal, but Piotroski also pointed to the bottom feeders (scoring 1 or 2) to be five times as likely to de-list or go bankrupt. In that way I use it like the Altman Z score as a red flag, not to buy something, when the score is too low.

There is one potential problem with this AAII screener. They only include companies that scored 9 out of 9 on the Piotroski F score, where as Piotroski, in his study, included companies that score 8 or 9. The screener may be unnecessarily rigid and exclude many potential investment opportunities.

Keep up the good work.

I hope this helps. Sorry to Josh if this is not what he meant.

This is absolutely the last thing I thought I would ever read on this site. You need to read up on the concept of replacement value (compared to net asset or book value, compared to franchise value, compared to intrinsic value). Replacement value can be a much better proxy for intrinsic value in many industries, and in many market cycles where cash flow this year or next year may have no worth in predicting a company’s true cash flow power. Greenwald’s book is as good as any at laying out these concepts. Come on – you’re better than that.