Interesting Ideas

[systematic]

In this thread cash being greater than market cap (or cash per share greater than price) was mentioned. I don't quite get the aim of that (I would deduct liabilities), but I need to get my post count up if I'm ever to enter the monthly tipping comp, lol, so I thought I'd have a look.

There were 135 that I found with cash greater than market cap. Someone mentioned profits so I thought that might narrow it down, and it did, to 19 stocks. Barely any of any size though.

 

[burglar]

... cash being greater than market cap ...

The only one on the list with which I am reasonably familiar is (AXE) Archer Exploration.
I hold some but cash is not the only reason I hold.

Nor is the abundant, high quality graphite.

They came to my notice when they discovered Manganese.
And they have other stuff too!

 

[skc]

In this thread cash being greater than market cap (or cash per share greater than price) was mentioned. I don't quite get the aim of that (I would deduct liabilities), but I need to get my post count up if I'm ever to enter the monthly tipping comp, lol, so I thought I'd have a look.

There were 135 that I found with cash greater than market cap. Someone mentioned profits so I thought that might narrow it down, and it did, to 19 stocks. Barely any of any size though.

View attachment 49235

Your data is out of date for at least some of these. Mmx and dmg have sold assets and paid the capital return. Some Others have tones of redbank, centro and mqg are on that list. CKK is a complete basket case and directors are unlikely to give the money out. BEL is trading below NTA but it's a plaything of it's major holder. RIS is a stange one i looked at years ago but it has the liquidity of granite at room temperature.

 

[systematic]

Your data is out of date for at least some of these. Mmx and dmg have sold assets and paid the capital return. Some Others have tones of redbank, centro and mqg are on that list. CKK is a complete basket case and directors are unlikely to give the money out. BEL is trading below NTA but it's a plaything of it's major holder. RIS is a stange one i looked at years ago but it has the liquidity of granite at room temperature.

Thanks skc. I think I used data from last annual reports and not latest interim reports, I'll re-check that - but that should be it I would think, because the data is good (but then, accidents do happen!).
Liquidity or quality (or anything else for that matter) was not considered, it was just a check of the idea in the thread mentioned.

There are certainly a few companies I'm not familiar with!

 

[systematic]

Try again.

Appreciate your input very much skc, as I messed something up initially.
Before making sure I was looking at latest data I thought I'd first just re-run what I originally did, and got a different result (e.g. no MMX to be seen). So that table above (I'll go back and delete) was an error by the looks of it. Apologies, and I'm glad it was picked up.

Anyway, hopefully this looks a bit better. Cash greater than market cap, positive earnings.

​

I was using cash and equivalent. Just using cash, I got.....

​

What was the aim here? As in, can you expand on the working capital comment mentioned in the thread etc. Not something I usually look at (though I do look at NCAV for fun), so any help understanding what we're trying to get at here appreciated.



PS. just realised can't edit previous post.....

 

[systematic]

Ah, I did replicate what I had done before, and I was using recent data.

I think the issue is possibly 'cash' in relation to balance sheet cash whereas we might be talking cashflows?

So before I post another table (like I was about to!), help me define what we're looking for here.

Always interesting to learn stuff, so it's all good!

 

[systematic]

​

So I'm wondering if this is more along the lines of what we were getting at? This is Free cash flow greater than market cap (equivalent of saying free cash flow per share greater than current price), as opposed to balance sheet cash. (BTW, Listed in order of free cash flow to market cap).

This is most recent reported...should I have used past trailing 12 months?
Negative earnings aren't of interest here, because we're only wanting to look at cash - right?

 

[burglar]

So I'm wondering if this is more along the lines of what we were getting at? ...

Are you seeking takeover targets?
Or pre-loved undervalued stock?

 

[systematic]

Are you seeking takeover targets?
Or pre-loved undervalued stock?

Personally, neither. I'm wanting to understanding what others looking for these types of stocks are looking for......

 

[burglar]

Personally, neither. I'm wanting to understanding what others looking for these types of stocks are looking for......

Perhaps you seeking troubled companies, in the way that Warren Buffett does!

But then he is capable of swallowing them whole, and turning them around!

 

[systematic]

Perhaps you seeking troubled companies, in the way that Warren Buffett does!

But then he is capable of swallowing them whole, and turning them around!

I don't think 'seeking troubled companies' really defines Buffet's strategy.....
No, I'm pretty much just exploring an idea taken from here as mentioned above.

 

[skc]

View attachment 49262​

So I'm wondering if this is more along the lines of what we were getting at? This is Free cash flow greater than market cap (equivalent of saying free cash flow per share greater than current price), as opposed to balance sheet cash. (BTW, Listed in order of free cash flow to market cap).

This is most recent reported...should I have used past trailing 12 months?
Negative earnings aren't of interest here, because we're only wanting to look at cash - right?

Lol. Hastie!

If I make sure a scan and comes up with a company that's bankrupt, I will check my data and query very carefully.

 

[burglar]

I don't think 'seeking troubled companies' really defines Buffet's strategy.....
No, I'm pretty much just exploring an idea taken from here as mentioned above.

Can I assume that:


1. You are a Buffett fan?
2. You are a budding "Value Investor"?

For the record "I don't think 'seeking troubled companies' really defines Buffet's strategy....."
Its just something he has been known to do!

I am a fan of the man.

 

[systematic]

Lol. Hastie!

If I make sure a scan and comes up with a company that's bankrupt, I will check my data and query very carefully.

I will do. I'm not really getting anywhere with clarifying the idea from the previous thread though!

 

[systematic]

Lol. Hastie!

If I make sure a scan and comes up with a company that's bankrupt, I will check my data and query very carefully.

I will do. I'm not really getting anywhere with clarifying the idea from the previous thread though!

...I'm back. Phew! No problems.

 

[Ves]

I looked at TTA Holdings (Code: TTA) which is on one of the lists above a few weeks ago. They distribute TEAC branded products in Australia.

The cash on their balance sheet is not distributable. They need it to meet the loan requirements that are falling due.

edit: spelling

 

[systematic]

I looked at TTA Holdings (Code: TTA) which is on one of the lists above a few weeks ago. They distribute TEAC branded products in Australia.

The cash on their balance sheet is not distributible. They need it to meet the loan requirements that are falling due.

So, with this type of query, we're looking for a particular situation?

Again, this is not something I look at (free cashflow greater than market cap).

So, we want cash that is distributable? Why?

 

[Ves]

Try this Ben Graham inspired scan:

Is a formulaic approach – investing by pure statistics in dozens of stocks at the same time – a viable value strategy?

Yes. In fact, it’s very simple to boil down the essence of Graham’s approach into a strategy any investor could profitably follow for years:

1. Dividend Yield > Median Dividend Yield of all stocks

2. P/E< Median P/E of all stocks

3. P/B (Tangible)< Median P/B (Tangible) of all stocks

4. Tangible Equity/Total Liabilities > Median Tangible Equity/Total Liabilities of all stocks

Rank by tangible equity/total liabilities.

source: http://www.gurufocus.com/news/170199/why-i-dont-diversify


I would be interested to see what the Top 20 are.

 

[Ves]

So, we want cash that is distributable? Why?

When I say distributable I mean cash that they are free to use as they please (ie. it is removable from the funding of the core operations). Capital return, dividend, fuelling future growth - that sort of thing.

Look at the balance sheet of TTA. Tell me what you see. How did their cash increase over the prior year figure?

If the cash is merely there to pay off a loan or it is required to meet working capital obligations then it is not removable.

In "net / net" type investing (and other forms of value investing, obviously) you want to get much more than for what you paid. That does not always mean cash, but cash is obviously more certain. Cash is liquid and you know immediately what it is worth.

 

[So_Cynical]

I don't think there is a rock solid formula for finding stocks that are on the turn around or the next big thing...some people simply feel more comfortable taking risks after they have fed a few numbers into a cruncher, people are getting rich selling systems to people who need systems to feel comfortable.

Its a strange world. :dunno: