Quick housekeeping post. I have been wondering why I got no comments for the past few months until a blog reader emailed me asking what's going on with his comments not going through. I checked and there were a lot of comments waiting for approval...sorry everyone about that.
I have comment moderation turned on because I get a lot of spam comments. Something happened and the feature that emails me when a comment is placed got broken. I've just gone through and manually accepted a ton of comments. I'll check directly like this from now on.
--Dan
I have comment moderation turned on because I get a lot of spam comments. Something happened and the feature that emails me when a comment is placed got broken. I've just gone through and manually accepted a ton of comments. I'll check directly like this from now on.
--Dan
Thanks for this update too. I went back to the posts I'm keen on to check the comments which isn't something I usually do.
ReplyDeleteEveryone leaving a comment in the past 3 months was probably thinking to themselves what a jerk I am for rejecting...
DeleteIn reading the last annual report, I can't understand why they would restate the financials unless they never did really own 80% of Tower Performance. It would be far better for stake holders to have a detailed report on why this was changed, who advised them and what this means for stakeholders. You've gone into great detail about cigar butts investing like to do, what you leave out are important details. this company has filings going back to the 1970's through edgar. it would be correct to consolidate for gaap and beneficial for the stake holders, I would not see holding it as an investment as beneficial to the stake holders (unless they have 100% now). maybe the for majority if they plan to liquidate but certainly not for the common stake holders. I would like to hear from Tower Performance/Fortran a conference whats going on and who the accounting team is. when I see other sites with stock promoters talking about a stock that's never been mentioned much before I start thinking gray sheets. whos the advisors on this that would leave anyone to think this company is still in operation. If fortran now just has an investment in tower performance in new jersey, a phone call to them would seem mutually important to see if fortran ever really owned them or was it all a scam.
ReplyDeleteI don't know if you track this; which stocks are currently the most undervalued in your portfolio (e.g. based on fundamentals such as p/s, p/e, p/b, p/operating cash flow etc. or better Enterprise value / sales, EV/EBIT) ?
ReplyDeleteDo you only cover U.S. stocks? (An interesting non-U.S. stock below liquidation value would e.g. be Altus Towarzystwo Fundszy Inwstycyjnych, ALI, which crashed more than 90% in one year)
No I don’t track those valuation ratios. I look at them when I buy and then periodically review or keep the in mind as new filings come out. But nothing formal
DeleteYes I pretty much stick to the US. There’s enough cheap and ugly stuff here for me
Is it really possible to buy these stocks, I mean e.g. to put few thousands USD in one stock? Large bid-ask spreads could also be an issue...
ReplyDeleteYes it’s possible and the spreads can be wide. Patience is required. Also pays to keep watching the offer because sometimes larger chunks show up
DeleteJust look at a chart. You can see how many dollars changed hands. Volume * price
Let me tell you how I buy. If I like a stock and see some available for a good price then I take it. All of these stocks I buy I am looking to make several hundred percent so I don't worry about a few percent when buying. Maybe after I have some then I'll try dropping my buy price to get it lower. I always use limit orders, never market. Just pick a price then put in your order and wait. I have 4 or 5 open orders right now.
DeleteIt takes me days, weeks, months, or maybe even years to get my positions. I did most of my HEMA buying over about 6 months. My ADDC buying was over maybe 4 months. SIMA was almost a year. Recently I wrote about PCYN and that took me a few months to get what I wanted. HYDI popped up today on dividend news and I've been buying that one for over a year and a half, here and there.
There's one I've been buying for probably 6 months now that I still don't have enough of. I have probably a couple thousand dollars worth but I want more before I write about it. Problem is it never trades so here I sit, waiting.
Look at charts and watch the stocks. You'll get a feel for it.
Thank you for your Feedback. One last point: I understand that you -as a rule of thumb- are ready to pay e.g. 10 x earnings, 1 x book value or 1 x sales for a company. So you get 3 prices for a Company. Do you than take the average of the 3 prices or does this give you a min - max Price range? Further you buy stocks at a multi-year low. All these approaches make a lot of sense to me.
ReplyDeleteBy the way it seems that retained earnings alone is the explaining factor of price to book. see here: http://review.chicagobooth.edu/accounting/2017/article/why-value-investing-buy-signal-out-date
Of those 3 approaches it all depends on the situation. Usually one or two of them come to a value of zero with these companies. I'm not trying to get very precise but generally I take the higher of the 3. Every situation is different so you can't just do this blindly but that's my rule of thumb. Maybe I need to write a post about this stuff.
DeleteIf you look in the comments on my FRTN article I explained more. http://www.nonamestocks.com/2018/08/frtn-is-why-i-buy-all-these-junk-stocks.html
I looked at your blog performance page. The performance was really very good. This is good but also a disadvantage. Let me explain this. The stocks have risen and should now be on average more expensive than initially. If one assumes that a price reversal effect exists in the longer term, it might be useful to sell many of these stocks and replace them with cheaper ones. However, it is quite difficult to say if the prices of these stocks will already reverse or momentum will continue.
ReplyDelete"What goes up often comes back down"; There is evidence that a strong long-term price reversal effect exists. See e.g. here: https://www.ivey.uwo.ca/cmsmedia/377555/return_reversal_in_uk_shares_oct_2006.pdf
I think it's a fallacy to think of prices mean reverting. Usually what mean reverts are earnings (margins really), sometimes revenues in case of cyclicals in combination with operating leverage, which cuts in both directions. That being said, margins tend to be determined by the industry with software having high margins and retail slim ones at the extremes.
DeleteMicrocaps are a bit different of course, as attention, emotion and single bidders/askers play an extraordinary role in the short to medium term.
I think it is both - mean reversion of margins and an overreaction based on a continuous bad news flow. One evidence is this: Falling knives are stocks with 60% or more price decline in the last 12 months. According to Brandes Investment Partners (see the Paper: "Falling Knives around the World") these falling knives perform much better than the market in the next 3 years on a statistical basis. Other studies show that these stocks triple the market performance.
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