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Archive for the ‘Stocks’ Category

Do long-term, normalized price ratios outperform single-year price ratios?

Posted in About, Enterprise Multiple, Stocks, Strategy, Value Investment, tagged , , , , on May 2, 2012 | 8 Comments »

In their March 2012 paper, “Analyzing Valuation Measures: A Performance Horse-Race over the past 40 Years,” Wes Gray and Jack Vogel asked, “Do long-term, normalized price ratios outperform single-year price ratios?“ Benjamin Graham promoted the use of long-term, “normalized” price ratios over single-year price ratios. Graham suggested in Security Analysis that “[earnings in P/E] should cover a [...]

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Which price ratio outperforms the enterprise multiple?

Posted in About, Enterprise Multiple, Stocks, Strategy, Value Investment, tagged , , , on May 1, 2012 | 12 Comments »

Friends, Romans, countrymen, lend me your ears; I come to bury Caesar, not to praise him. Having just anointed the enterprise multiple as king yesterday, I’m prepared to bury it in a shallow grave today if I can get a little more performance. Fickle. In their very recent paper, “Analyzing Valuation Measures: A Performance Horse-Race over the past [...]

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Which price ratio best identifies value stocks?

Posted in Enterprise Multiple, Enterprise Value, Stocks, Strategy, tagged , , , , , , , , , on April 30, 2012 | 14 Comments »

Which price ratio best identifies undervalued stocks? It’s a fraught question, dependent on various factors including the time period tested, and the market capitalization and industries under consideration, but I believe a consensus is emerging. The academic favorite remains book value-to-market capitalization (the inverse of price-to-book value). Fama and French maintain that it makes no difference which [...]

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Active versus passive value investing: Does spending time researching a company’s fundamentals generate higher returns?

Posted in About, Stocks, Strategy, Value Investment, tagged , on April 27, 2012 | 10 Comments »

Aswath Damodaran, in his excellent paper “Value Investing: Investing for Grown Ups?”, asks whether spending time researching a company’s fundamentals (“active” investing) generates a higher return for investors than a comparable value-based index (“passive” investing)? Says Damodaran: Of all of the investment philosophies, value investing comes with the most impressive research backing from both academica and practitioners. [...]

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Value investing works, so why do value investors underperform? The evidence for activist value investors

Posted in Activist Investors, Stocks, Value Investment, tagged , , , on April 26, 2012 | 4 Comments »

This week I’ve been taking a look at Aswath Damodaran’s paper ”Value Investing: Investing for Grown Ups?” in which he asks, “If value investing works, why do value investors underperform?” Damodaran divides the value world into three groups: “The Passive Screeners,” – “The Graham approach to value investing is a screening approach, where investors adhere to strict screens… [...]

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Value investing works, so why do value investors underperform? The evidence for contrarian value investors

Posted in Contrarian investment, Stocks, Strategy, tagged , , on April 25, 2012 | 8 Comments »

Yesterday, I examined Aswath Damodaran’s paper ”Value Investing: Investing for Grown Ups?” in which Damodaran asked, “If value investing works, why do value investors underperform?” Damodaran divides the value world into three groups: “The Passive Screeners,” – “The Graham approach to value investing is a screening approach, where investors adhere to strict screens… and pick stocks that pass those [...]

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Value investing works, so why do value investors underperform? The Passive Screeners

Posted in Stocks, Strategy, Value Investment, tagged , on April 24, 2012 | 14 Comments »

Abnormal Returns asks “If value investors are the “grown ups” of the investment world, why aren’t their returns better?” and links to a great Aswath Damodaran paper “Value Investing: Investing for Grown Ups?” in which Damodaran examines the reasons why over an epic 77 pages. Damodaran begins by asking, “Who is a value investor?” He divides the value [...]

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Kinnaras sends new letter to board of Media General Inc ($MEG)

Posted in Activist Investors, Stocks, tagged , , , on April 23, 2012 | Leave a Comment »

Kinnaras Capital Management demonstrates characteristic tenacity in a new letter to Media General Inc (NYSE:MEG) sent after Kinnaras’s exclusion from the most recent earnings call: I intended to voice those concerns on the Q1 2012 conference call but despite following directions to join the queue, it appears that I was not allowed to participate in this call. This is a poor response to [...]

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Domo Arigato, Mr. Robotti

Posted in Stocks, tagged , on April 13, 2012 | Leave a Comment »

Robert Robotti, founder of Robotti & Company, and noted Grahamite small-to-mid cap value investor, started out as an accountant working for the auditor of Tweedy, Browne Company. After leaving the accounting firm Robotti worked for “Super” Mario Gabelli as his CFO for three years when Gabelli was only a twelve‐person firm. Applying the lessons from Tweedy, Browne and [...]

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Kinnaras sends follow up letter to board of Media General Inc ($MEG)

Posted in Activist Investors, Liquidation Value, Stocks, Value Investment, tagged , , on April 12, 2012 | Leave a Comment »

Kinnaras Capital Management has sent a follow up letter to Media General Inc (NYSE:MEG) requesting the board “selloff MEG in its entirety and divorce this company from the inept management team currently at the helm.” In its earlier letter Kinnaras expressed frustration with the performance of MEG, and urged the Board to “take advantage of the robust M&A market [...]

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