netnet

jamesmith

net net, the original Ben Graham style value investing, finding discrepancy between a stock's price and its value.
He will consider buying when the stock is trading less than 66% of its Net Current Asset Value: Market Cap < 0.66 * (Current Asset - Total Liabilities)
Stocks trading at such extreme discount are rare, especially after several years of bull market. It's usually form a company with many bad news and negative emotional reactions from investors, put in another way, these are stocks nobody wants; But Graham insisted that: “Buy when most people, including experts, are pessimistic, and sell when they are actively optimistic,”  
yes, Some of these stocks will go bust, but the majority will survive and their business performance will revert to the mean. This post is dedicated to the discussion of net net investing.

Essential Lessons from Ben Graham
1) Investment is most intelligent when it is most businesslike.

2) In the old legend the wise men finally boiled down the history of mortal affairs into the single phrase, "This too will pass." Confronted with a like challenge to distill the secret of sound investment into three words, we venture the motto, MARGIN OF SAFETY. This is the thread that rounds through all the preceding discussion of investment policy - often explicitly, sometimes in a less direct fashion.

3)  (on MEAN REVERSION) It is natural to assume that industries which have fared worse than the average are "unfavorably situated" and therefore to be avoided. The converse would be assumed, of course, for those with superior records. But this conclusion may often prove quite erroneous. Abnormally good or abnormally bad conditions do not last forever. This is true of general business but of particular industries as well. Corrective forces are usually set in motion which tend to restore profits where they have disappeared, or to reduce them where they are excessive in relation to capital.

源济

谢谢分享，周末愉快！

wsjboy

学习，谢谢！

jamesmith

One stock trading below NCAV is SHOS (Sears Hometown and Outlet Stores), and yes, business has been bad/getting worse lately, thus shares are at such an low price. Now, how much will Graham pay for SHOS?

PRELIMINARY FOURTH QUARTER result
http://www.shos.com/Files/Earnin ... l%20Year%202014.pdf

10K is not out yet, we can work with preliminary data for now. Total Current Asset is 497295000, Total Liabilities are 223436000, shares outstanding are 22666000, that gives us NCAV per share of $12.08. Current market price is $8.51 right now! Shares are trading substantially below NCAV value.
Graham said he will consider buying if price is at 66% of NCAV, so 0.66 * 12.08 = $7.97, Graham will not pay more than $7.97 per share for SHOS.
Inventory makes up most of Current Asset, next we should look at 10Q and 10K to get an idea of the true value of its Inventory!
At the same time, let's wait and hope price drops more!


“Traditionally the investor has been the man with patience and the courage of his convictions who would buy when the harried or disheartened speculator was selling.” — Benjamin Graham & David Dodd

jamesmith

looked at financial statements, business is definitely not good (otherwise it won't be selling so cheap), but i don't see red flags with inventory and management quality. At this price, it is too attractive to ignore, I started a position in SHOS. Will write more about inventory and business later (haha, sometimes i got lazy to write because it doesn't seem like anyone in HT is interested in value investing judge by the lack of posts here, however formatting and writing down my thoughts is helpful step to be a better investor. Whoever is reading this, I encourage you to write down your investing rationals here).

TWO roads diverged in a yellow wood,       
And sorry I could not travel both       
And be one traveler, long I stood       
And looked down one as far as I could       
To where it bent in the undergrowth;               

Then took the other, as just as fair,       
And having perhaps the better claim,       
Because it was grassy and wanted wear;       
Though as for that the passing there       
Had worn them really about the same,             

And both that morning equally lay       
In leaves no step had trodden black.       
Oh, I kept the first for another day!       
Yet knowing how way leads on to way,       
I doubted if I should ever come back.                

I shall be telling this with a sigh       
Somewhere ages and ages hence:       
Two roads diverged in a wood, and I—       
I took the one less traveled by,       
And that has made all the difference.         

jamesmith

it's hard to find net net at a market like this, i find another one after looking for sometime, 我先研究一下再来说...

quick update on SHOS...
earning release: http://shos.com/Files/Exh.%2099. ... rning%20Release.pdf
form 10Q: http://shos.com/Files/SHO-5.02.15-10Q.pdf

SHOS announced Q1 earning, it made a small profit (应该是好于大部分人的预期了, 市场是觉得SHOS要倒闭的，不然不会卖这么便宜). 总体revenue 和 profit 都轻微下跌，在很多大retailer都过得不怎么样的情况下，这样的业绩也算过得去了。依然是很依赖 Sears Holding。
短期借款减少了(本来就很少负债...), outlet 的renvenue增加了, 看得出来想慢慢关掉不赚钱的hometown store, 然后多开利润比较高的outlet store, 这个转变不容易，要花很长时间。
主要是市场的预期实在是太低了，虽然earning不是很抢眼，也令股价涨了一些。


再算一下新的 NCAV, shares outstanding 没有变, NCAV = $12.12, 66% of that is around $8. Market Price right now is $8.81
我在$7.1左右加了，准备再加的，想不到这么快就过$8了，如果是Graham的话，现在的价钱不会再买了，虽然我觉得还是挺便宜的，$8.81还是有接近28%的discount啊...

jamesmith

NCAV update for SHOS, NCAV = $11.81, 66% of that is $7.79. Current price of $7.59 is below 66% of NCAV.

我是谁

jamesmith

Richardson Electronics, Ltd. (ticker: RELL)
most recent earning report: http://www.rell.com/webfoo/wp-co ... cleansubmission.pdf
10K: http://www.rell.com/webfoo/wp-co ... 5.30-10-K-FINAL.pdf

Anyone interested in a dividend paying stock selling below NCAV?



143,397,000 Total current assets
25,815,000 Total liabilities
12,866,097 shares outstanding
NCAV = $9.14, current price of $5.34 is 58.42% of NCAV value.
This company has a long history of paying dividends since 1990. It currently pays $0.24 a year (4.49%). Shares outstanding have been lowered slowly, the company is buying back shares. Edward J. Richardson is the chairman, CEO and President of the company, he owns 65% of voting rights, so he basically controls the company, buying RELL is trusting him as a business partner.

jamesmith

Many shall be restored that now are fallen and many shall fall that now are in honor. - Horace. Ars Poetica
夏则资皮、冬则资絺、旱则资舟、水则资车，以待乏也。 - 范蠡
论其有余不足，则知贵贱。贵上极则反贱，贱下极则反贵。- 范蠡

jamesmith

英皇娛樂酒店有限公司 (0296HK)
P/E = 3.62, P/B = 0.54, EV/EBITDA = 0.90
Earning reports: http://www.emp296.com/tch/investor/results.php

Earning reports with data up to September 30, 2015
http://www.emp296.com/pdf/Results/(1)%20c-EEH%20interim%20results%20announcement.pdf



Current Asset = $3,682,798,000
Total Liability = $1,464,848,000
NCAV =            $2,217,950,000
Shares outstanding = 1.3 Billion
NCAV per share = $1.706
Current price $1.41 is 17.35% below NCAV.

taking another look at assets:
非流動資產 (Non current asset)
投資物業 estimate only worth 50% on fire sale = 360,700,000
物業、機器及設備 estimate only worth 30% on fire sale = 429,828,900
預付租賃款項 prepaid expense worth 0% = 0
購買物業、機器及設備之已付訂金 = $0
商譽 = $0
modified 非流動資產 = 790,528,900

流動資產 (current asset)
存貨,按成本計 inventory worth 50% = 6,518,000
貿易及其他應收款 account receivable worth 75% = 240,239,250
預付租賃款項 prepaid expense 0% = 0
已抵押銀行存款 pledged bank deposit, 这个还真是不知道怎么算, 公司将港元换成人民币给银行抵押，然后换取港元銀行信貸(人民币利息比较高，用作抵押同时收取利息). 用$4.9Bliion HKD 换成人民币抵押赚利息换取$2.0 Billion HKD 信貸. 保守估计减少50% = 704,755,500
短期銀行存款 cash worth 100% = 19,682,000
銀行結餘及現金 cash worth 100% = 1,904,973,000
modified 流動資產 = 2,876,167,750

这样算的话公司资产值 $3,666,696,650 or $1.694 per share. 现价 $1.41 有 16.7% discount, 算的很保守，真正价值应该比这个数要高。。。命运基本上跟Wynn相似，要等澳门赌业恢复，discount 比Wynn高...粗略看了看业绩，VIP房业绩下跌比澳门整体VIP房业绩下跌的少，可能英皇娛樂跟VIP客人关系比较好，在拉客人这方面有竞争力.
可惜我没有IB account, 买不了0296, 我现在持有WYNN, 微微盈利...

Jeff

学习，谢谢！

Jeff

jamesmith 发表于 2015-12-16 12:16 AM
Richardson Electronics, Ltd. (ticker: RELL)
most recent earning report: http://www.rell.com/webfoo/ ...

Not sure why the common shares outstanding (13,104,000) is different from you listed?

jamesmith

Jeff 发表于 2015-12-25 01:15 PM
Not sure why the common shares outstanding (13,104,000) is different from you listed?

公司在进行 buy back. 根据最新的 quarterly earning report, (http://www.rell.com/webfoo/wp-co ... cleansubmission.pdf)

看第一页底部:

As of October 5, 2015, there were outstanding 10,725,453 shares of Common Stock, $0.05 par value and 2,140,644 shares of Class B Common Stock, $0.05 par value, which are convertible into Common Stock of the registrant on a share for share basis.

shares outstanding 是 12,866,097

jamesmith

Jeff 发表于 2015-12-25 01:07 PM
学习，谢谢！

不用客气，欢迎多来讨论和发帖。

Jeff

jamesmith 发表于 2016-1-2 05:31 PM
公司在进行 buy back. 根据最新的 quarterly earning report, (http://www.rell.com/webfoo/wp-content/u ...

The information listed in the fidelity is not the current Q yet.

Thanks

wsjboy

m_flo: 0.00
RELL -0.088 - 4.23 070906 Buy       
RELL, svcs,richardson electronics,electrncs whlsl,cap 72970000.0,sh 12779334.50 RELL   yh fvz gg fool  msn  stox  j3  a
["eps 26.8 -900.0,p_b 0.51,", "alpha -39.7,beta 0.31,a_vol 34970, div 4.23 151104,insi 0.1 139.66,inst 64.3 -20.55,recom 5.00"]
8 [2 0 3 3]
~~~~ 160104 1052 ~~~~
Q: 5.66 5.71 5.66 5.71 0.71% | 6.28K 0.00 | 1.78% 1.195 0.486 0.078
[ 2.81 3.84 2.88 | 6.31 6.41 1581 | 5.28 5.20 1941 | 5.65 1777 | b 5 5.88 5.49 ]
~~~~~~~~~~~~~~~~~~~~~~
[ -        CTT        -        -        -        CFF        CFF        -        CTT        CTT        BB- ]
[w DTT        CFF        -        CFF        -        -        -        P        -        -        BBL ]
[-         b2        b+        -         -         -         -         -         -         - ]

jamesmith

RELL 10Q released (https://www.last10k.com/sec-filings/RELL/0001387131-16-003829.htm)

- Buy back continues
As of January 4, 2016, there were outstanding 10,702,932 shares of Common Stock, $0.05 par value and 2,140,631 shares of Class B Common Stock, $0.05 par value, which are convertible into Common Stock of the registrant on a share for share basis.

- Revenue went up due to new healthcare unit (IMES) acquisition finished at June 2015, but operational cost also increased due to acquisition, the result is greater lost than previous year. Health care unit have the highest profit margin and is only 8.7% of revenue, but makes up for 13% of gross profit.
Power and Microwave Technologies Group (PMT) is biggest business of RELL, and is declining, the hope is healthcare unit will grow faster than PMT decline. Management obviously know share price is cheap and is actively buying back shares. Buyback + dividend, we are actually getting >10% return for previous 12 months.
Currently the company's cash position is more than its market cap, it has enough cash to maintain the 4.44% dividend.

- Risk, the biggest risk of RELL comes from common shareholders have no voting rights. Richardson literally controls the company, and if he wants to, he could make the company go private. However he's been running the company for 50 years, and he runs like it is private already. I think there is little reason why he want to make the company go private because he already control the company.

- net net calculation


NCAV is $8.92 per share, 0.66 of that is $5.89.
I bought some shares today at $5.46.

jamesmith

Larry explaining net net investing in the movie: Other People's Money

jamesmith

added some SHOS today