"value investing"

Hope no one here bought into AMCV. The stock is now known
as AMCVQ. And it is down to just 1 penny....

What I don't understand is if it was halted and ceased trading
at 46 cents, how did it get down to a penny in price?

American Classics was halted on Oct 19 and on this day also
filed for bankruptcy. Hasn't traded since. And the stock was
delisted from the Naz on Nov 22. The company blamed Sept
11 as the culprit of it's demise. I think it was going down the
tube before Sept 11...

Perhaps another example why it can be a "penny wise and a
pound foolish" to invest in penny stocks...

Hey, this reminds me a little bit of ENE! About to be a penny!

:p
 
P2,

On how to do basic financial analysis, any college textbook on financial accounting will familize you with the special language and format they use and the often counter-intuitive assumptions that drive the accounting process. The last chapters are where they deal with ratios and interpreting financial statements.

From there, dip into Martin Fridson's "Financial Statement Analysis: a Practioner's Guide." The following chapter titles will give you an idea where his thinking is:
Part One Reading between the Lines
The Adversial Nature of Financial Reporting

A good book on value investing from a fundamentalist viewpoint is Marty Whitman's "Value Investing: a Balanced Approach." He thinks the Efficient Market Hypothesis is a crock, departs from Graham and Dodd with his own views, believes that superior results can be obtained from just publically available information, doesn't hesitate to take huge positions in a company's equity or debt if the numbers look "safe and cheap", etc. In short, all the tough mindedness of a trader, though he's a self-professed long-term investor.

Disclaimer: I'm very much a beginner at this number crunching stuff myself, but I've fallen in love with the fixed-income markets, where the data to do technical analysis just isn't afforadably available. My market niche is junk bonds using game theory, but I'm hoping the fundamental stuff will help me calculate better Ch. 11 workout ratios so I can cut my risks further.

Charlie
 
I recently finished the Grahm to buffett and beyond and found it to be a good read. I'm more interested though in looking for companies that are troubled, and hoping they can recover I am still quite new to all this, and not very successful. Glad i didn't bite the amcv. I would have been reamed. Thanx for helping me avoid it.
 
P2,

Whitman's criteria of "safe and cheap" don't exclude "troubled" companies. In fact, those are the only kind that are cheap. But what he also requires is a strong enough balance sheet that their current troubles, for which the market is punishing them pricewise, can be overcome.

Two categories of value investors need to be distinguished: generic value investors and deep value investors. (Actually, there is a third category, contrarians.) Deep value investors often call their projects "special situations" or "turnarounds." Their white shoe competitors often call such investors "vultures", which seems to describe where you're heading.

You're lookng for junk stocks the way I look for junk bonds, and for similar motivations. The premiums are in excess of the risks over sufficiently large samples of data, which was Milken's thesis, which built on Hinkman's earlier work, which continues to be validated in subsequent studies.

The trick is determining whether it's cheap for a good reason (=avoid) or cheap for a bad reason (=opportunity) and what is both the magnitude and the likelihood of the downsides and upsides, or the things Van Tharp talks about in managing risk.

Though your interest is the company's common stock, don't ignore the information their bonds can provide, especially since the research isn't sell-side as it is for equties. A good bond analyst is second only to a professional short seller in terms of the depth and breadth of his research.

Charlie
 
I've reread this thread a number of times. I am still very intrigued. I think that I can figure this out in time. I have a few questions still. How come the insider selling in amcv wasn't recognized by yahoo. Was it just a time lag in yahoo updating their data? Same situation in occf. The ceo sold almost 40m shares, yet the float is 2.2m.
Is outstanding shares the same thing as "beneficially owned shares" Beneficially owned seems to include those that can be converted from warrants and outstanding options. Is this the same thing? Do outstanding shares include options and warrants outstanding as well? (i don't think they do, but curious)
How exactly are yahoo's float numbers calculated.
Finally, and most relevent to this board, can you take a look at thv. I have built up quite a position in the stock. I am curious as to why it's at such a bargain. I must be missing something. I have looked at everything. Most of their earnings have been hidden by the massive goodwill on their books (which will be charged off in q1). They had ebitda of 4.08m in '01 and they are estimating ebitda of 5.5-6.5 this year. I did the numbers 100 times and I show them making 25-35c or so this year (excluding the goodwill charge). That give them a pe of 3-4 in a noncyclical industry or anything with ebitda growing pretty damn fast. What am I missing. Is it just a market mispricing b/c it's on the amex and a microcap, or is there something inherintly wrong with the company? Insiders are buying too. What am I missing? Only red flag I can possibly find is that they switched auditors recently. There must be something else.
 
1. It is very much more fun than daytrading. I like the idea of "snooping around" in the sec. filings and looking for goodies.

2. It's impossible to buy trends, or predict when they'll terminate before they have. I prefer to buy lows and sell highs. It's quite easy.
 
Having started out my "life" in Public Accounting, I feel pretty comfortable around Financial Statements....and am also quick to point out that there is a lot of "fuzzy accounting" going on. This is not just the Enron/Anderson debacle, but even in the basic reporting done by so many listed companies.

Get "book value" first, then figure out how many more quarters they can continue to lose money at the same rate to see a more real valuation. Read all the memorandums and attachments to the statements because there in lie the "swept under the rug" items that will probably show up in the near future.

Look out for asset valuations of "good will" - "sister companies" - "affiliates" and all the rest.

A simple example: As in ENE - if you start a company (an off shore parntership in their case), and then buy something from that company at an inflated price, showing sales and receivables (basically from yourself) as solid, big numbers....you can pick different Fiscal year ends, and proceed to do the dirty work via accruals and pro-formas.

Look for the difference in GAAP (Generally accepted accounting principles) and "pro-forma" statements...and the difference between what is reported to shareholders and what is reported to the SEC and other regulators.
 
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