Value Investing

jamesmith

Most of Hutong's discussions are based on technical analysis. The purpose of this thread is to create a gathering place for like-minded value investors.

This thread is to propose and discuss stocks in which investors like Buffett may invest.
Preferably, contributors here will have read about books on value investing, and be prepared to discuss/defend their picks in the context of value investing methods.
This thread also study and discuss methods of Warren Buffet, the world's best investor. Stocks in which he has already invested may be submitted to analysis.

鑫森淼焱垚

bububaba

redflag

happy_trading

我觉得应该学习Buffet如何投资发家的，比学习他发家后如何投资更有用。这只是针对我自己的现状。

Diffusion

jlht

源济

jamesmith

happy_trading 发表于 2012-8-31 12:06 PM
我觉得应该学习Buffet如何投资发家的，比学习他发家后如何投资更有用。这只是针对我自己的现状。

Recommend you to read Buffettology or The Warren Buffett Way. Both are very readable and provide good insight of Buffett's method.

Buffett's style evolved over time. From pure Graham type to now probably half Graham and half Fisher. He is also influenced a lot by Charlie Munger, who pushes Buffett to pay decent price for decent company rather than only buying low cheap stock. The most famous example is Coca-Cola (KO), Buffett bought it multiple times at P/E of mid 20s, definitely not a a pure Gramham style.

He's handling so much money now, he's looking to buy whole company instead of shares. But from what I read, Buffett's core investing style haven't changed:  "The basic ideas of investing are to look at stocks as businesses, use market fluctuations to your advantage, and seek a margin of safety. That's what Ben Graham taught us. A hundred years from now they will still be the cornerstones of investing." Warren Buffett, 1994

ysc

quix

silicon_beaver

happy_trading 发表于 2012-8-31 10:06 AM
我觉得应该学习Buffet如何投资发家的，比学习他发家后如何投资更有用。这只是针对我自己的现状。

I cannot agree more.  

wsjboy

wait, may try to join, and add some value stock analysis if those meaningless distracting pictures finally disappear in future pages.

jamesmith

how much will you pay for a company?

If in 2011:

It has revenue of 76346 million, with yearly revenue increase of 8% over last 5 years

Net earning of 8879 million, with yearly increase of 8% over last 5 years

Per share earning of $4.85, average 14% increase annually over last 5 years

Dividend of $2.82, estimate increase of 8 to 10% annually in the future

With share buyback program that reduced shares outstanding from 2109 millions in year 2007 to 1726 millions in year 2011

Diffusion

jamesmith 发表于 2012-9-13 08:39 AM
how much will you pay for a company?

If in 2011:

随手算算，重在参与。
$65 fair value, $45 good investment opportunity.

ctcld

a goog one - my tea!

当时惘然

thanks ... ...

jamesmith

Diffusion 发表于 2012-9-13 09:04 AM
随手算算，重在参与。
$65 fair value, $45 good investment opportunity.

Thank you for participating :)
With 2011 EPS of $4.85, $65 is a PE of 13.4, $45 is a PE of 9.28.   With 2011 dividend of $2.82, yield of $65 is 4.33% and $45 is 6.27%. Indeed, these will be great entry prices if it does get this low, You are a real value hunter!

Here's an update on first and second quarter of this company, for first six months of 2012:

revenue is $38054 million vs first six month of 2011 $36764 million

Net earning is $4478 million vs $4328 million

EPS is $2.6 vs $2.4

Annual dividend recently increased to $3.4 with next ex-dividend date Sep. 25th 2012.

Bought back 35.831 million shares

With current twelve months number. EPS is $5.05. Your price os $65 is PE of 12.87, yield of 5.23%, this is pretty sweet deal when 30 year treasury yield below 3% today. Sadly, it is not trading at $65. Are you willing to pay a little more for it now? or less?

水明善

I like this post very much. Thank LZ for his great efforts!

Based on my very very rough estimate following some assumptions, I may buy this stock at the range of $78-90. No more than $90.

Diffusion

jamesmith 发表于 2012-9-13 10:04 AM
Thank you for participating :)
With 2011 EPS of $4.85, $65 is a PE of 13.4, $45 is a PE of 9.28. ...

8% growth is good, but definitely not a growth play. So I won't pay any premium for it. Ideally I'll enter at $45 and start taking profit above $65. Now you see there is a bad thing for value investment, every once a while you'll have nothing to do for months or even years.