Fundamental Stock Analysis

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Fundamental Stock Analysis
The Market is NOT Efficient Fundamental
analysis can uncover individual companies selling
in the public market at significant discounts to
intrinsic business value. We are a value
equity manager Buying assets _at_.50 on the
1.00 Buying businesses _at_ reasonable
multiples of earnings, cash flow, book value
growth rates
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EFFICIENT MARKET THEORY
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BLOWS DEALT TO EMT
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BLOWS TO THE EMT
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BLOWS TO THE EMT
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VALUE INVESTING - AN EXAMPLECarson Pirie Scott -
A 13 Stock (1984)
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VALUE INVESTING - AN EXAMPLECarson Pirie Scott -
A 13 Stock (1984)
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VALUE INVESTING - AN EXAMPLECarson Pirie Scott -
A 13 Stock (1984)
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VALUE INVESTING - AN EXAMPLECarson Pirie Scott -
A 13 stock (1984)
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VALUE INVESTING - AN EXAMPLECarson Pirie Scott -
A 13 stock (1984)
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VALUE INVESTING - AN EXAMPLECarson Pirie Scott -
A 13 Stock (1984)
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VALUE INVESTING - AN EXAMPLECarson Pirie Scott -
A 13 Stock (1984)
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VALUE INVESTING - AN EXAMPLECarson Pirie Scott -
A 13 Stock (1993) - The Sequel
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VALUE INVESTING - AN EXAMPLECarson Pirie Scott -
A 13 Stock (1993) - The Sequel
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VALUE INVESTING - AN EXAMPLECarson Pirie Scott -
A 13 Stock (1993) - The Sequel
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VALUE INVESTING - AN EXAMPLECarson Pirie Scott -
A 13 Stock (1993) The Sequel
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VALUE INVESTING - AN EXAMPLECarson Pirie Scott -
A 13 Stock (1993) - The Sequel
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VALUE INVESTING - AN EXAMPLECarson Pirie Scott -
A 13 Stock (1993) - The Sequel
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VALUE INVESTING - AN EXAMPLETime, Inc. - A 105
Stock (January, 1989)
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VALUE INVESTING - AN EXAMPLETime, Inc. - A 105
Stock (January, 1989)
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VALUE INVESTING - AN EXAMPLETime, Inc. - A 105
Stock (January, 1989)
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VALUE INVESTING - AN EXAMPLETime, Inc. - A 105
Stock (January, 1989)
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VALUE INVESTING - AN EXAMPLETime, Inc. - A 105
Stock (January, 1989)
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VALUE INVESTING - AN EXAMPLECBS - A 155 Stock
(February, 1992)
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VALUE INVESTING - AN EXAMPLECBS - A 155 Stock
(February, 1992)
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VALUE INVESTING - AN EXAMPLECBS - A 155 Stock
(February, 1992)
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VALUE INVESTING - AN EXAMPLECBS - A 155 Stock
(February, 1992)
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VALUE INVESTING - AN EXAMPLECBS - A 155 Stock
(February, 1992)
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VALUE INVESTING - AN EXAMPLECBS - A 155 Stock
(February, 1992)
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VALUE INVESTING - AN EXAMPLEFingerhut - A
14.375 Stock (March, 1997)
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VALUE INVESTING - AN EXAMPLEFingerhut - A
14.375 Stock (March, 1997)
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VALUE INVESTING - AN EXAMPLEFingerhut - A
14.375 Stock (March, 1997)
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VALUE INVESTING - AN EXAMPLEFINGERHUT - A
14.375 Stock (March, 1997)
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VALUE INVESTING - AN EXAMPLEFINGERHUT - A
14.375 Stock (March, 1997)
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VALUE INVESTING - AN EXAMPLEFingerhut - A
14.375 Stock (March, 1997)
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VALUE INVESTING - AN EXAMPLEFingerhut - A
14.375 Stock (March, 1997)
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VALUE INVESTING - AN EXAMPLEFingerhut - A
14.375 Stock (March, 1997)
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VALUE INVESTING - AN EXAMPLEFingerhut - A
14.375 Stock (March, 1997)
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VALUE INVESTING - AN EXAMPLEFingerhut - A
14.375 Stock (March, 1997)
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VALUE INVESTING - AN EXAMPLEFingerhut - A
14.375 Stock (March, 1997)
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VALUE INVESTING - AN EXAMPLEOF WHAT CAN GO
WRONG!Liz Claiborne - A 31 Stock (February,
1992)
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VALUE INVESTING - AN EXAMPL OF WHAT CAN GO
WRONG!Liz Claiborne - A 31 Stock (February,
1992)
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VALUE INVESTING - AN EXAMPLOF WHAT CAN GO
WRONG!Liz Claiborne - A 31 Stock (February,
1992)
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VALUE INVESTING - AN EXAMPLE OF WHAT CAN GO
WRONG!Liz Claiborne - A 31 Stock (February,
1992)
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VALUE INVESTING - AN EXAMPLE OF WHAT CAN GO
WRONG!Liz Claiborne - A 31 Stock (February,
1992)
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VALUE INVESTING - AN EXAMPLE OF WHAT CAN GO
WRONG!LIZ CLAIBORNE - A 31 Stock (February,
1992)
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VALUE INVESTING - AN EXAMPLEOF WHAT CAN GO
WRONG!Liz Claiborne - A 31 Stock (February,
1992)
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What Worked!
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1998 Performance by Capitalization Tier
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What Worked!
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10 Largest Market Caps - SP 500As of 12/31/98
Source Baseline
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Small Capitalization(1) PerformanceRelative to
SP 500 Index
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The List of Positives Favoring Small Caps and
Mid Caps is Long
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Small Cap Cycles
Dating back to 1926, every five-year period of
small cap underperformance was followed by
significant periods of small cap outperformance.
The last five years has been the greatest period
of underperformance on record. Today, small
caps' superior earnings growth and low valuations
lead us to conclude that we are about to witness
an historic era of small cap outperformance.
Data from "Predicting size Effect Reversals" by
Marc R. Reinganum as published in Small Cap
Stocks by Klein/Lederman. Comparison is between
the largest market cap decile and declie 5,
corresponding roughly to the SP 500 Index and
Small Cap stocks of less than 1 billion in
market cap. Data for the last 5 years is the
cumulative difference between the Vanguard Index
500 and the Vanguard Index Small Stocks through
June 1998.
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