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What is holding the company back is the structure of interest rates. At these kinds of levels, when you’re trying to write a long-term retirement policy and all you can get is 2%, it is tough to make any money. This is the kind of company that will do very well if and when interest rates rise.
If you want to find a way to get yourself mangled, get into Biotech’s. They are expensive and a lot of them are trading on the hopes that whatever they are doing will get approved. Approval rate of these things is so low that it makes it a bit of a gamble. This one is a cut above the pure, speculative biotechs because they have stuff and they actually earn money. Trading about 15% above its FMV. However, earnings forecasts have been kind of flat lining recently. Has pretty good support technically around $60.
His valuation chart of the company shows it is trading at 50% of the BV, which is as low as it has traded in all the years that he has a history on it. One of the big problems is that earnings forecasts continue to go into the ditch. Finally the FMV has fallen so far that it has caught up with the price. Thinks the outlook for gold bullion is good when he sees what the Central Banks globally are doing.
This stock has done fabulously well. They made all of these acquisitions. The stock has, fairly far, outrun its FMV because of their tremendous momentum with acquisitions. He is not surprised that the stock is setting back. It is historically high and also high against all of his parameters too. It is expensive.
Very interesting. In the early part of its existence it had a very fast growing balance sheet, which has slowed down quite a bit. It is now trapped between one of its support points and its FMV. The FMV is falling slightly, while the technicals are rising and the company is getting squeezed. Growth is slowing and not necessarily leading edge anymore. It may be about to take another step down.
When you look at the earnings forecast for the coming year, minus 37%, even the dividend they are paying now doesn’t cover what they are paying out. What concerns him is the long run balance sheet trend back to 2011, which is in a downward slope. It doesn’t have a particularly robust balance sheet and is paying out too much in dividends and selling at BV right now.
One of the most interesting companies he has ever come across. The long-term trend of its BV has been steadily down. This is because the company, for years and years has been paying out a good deal more than it had earned. Because it has a very high price to book, it keeps issuing stock. When we had a bear market in 2008-2009 and the company couldn’t continue to issue stock, the share price really cratered. When it can’t execute its strategy, it is catastrophic for the owners, so keep that in mind.
At the present time, this is trading up at quite an astonishing price to book level. In his FMV view, it is about 25% overvalued. There hasn’t been a lot of growth in the BV for some period of time. However, earnings have been notching up nicely. This is what he would call speculatively priced.
Markets. There are 2 kinds of stocks. Those that have been left behind and haven’t really done very much, and then there are the market leaders who have been leading all the way along. They have been marching along and performing extremely well, but the problem he sees in a lot of these companies is that they are getting beyond what he calculates as their Fair Market Value. The good news for value managers who have been left in the wake, is that if the market is to continue there has to be some catch-up in this area.