Rinker a Value Analysis

[Realist]

"The Rinker share price has been sold off over 30 per cent in the last few weeks, but it has been way overdone and bargain hunters are coming into the market in anticipation of a possible takeover."

Yes Siree....

 

[brisvegas]

Unfortunately I don't have a crystal ball that works.

Obviously you do, what is a stock that's gonna boom next year and I should buy?

you answer my questions first then we will address yours . my 06 portfolio picks are approaching 100% return in under 9 months . i cant see why we cant repeat that in 07 . first things first though

.............. bris

 

[ducati916]

Realist

Ducati, you seem to be speaking to me as if you know what you are doing and I don't.

That's correct.
The reason for that is demonstrated within the laxity of your accuracy.

Yet your valuations are the most ridiculous and incorrect litanies of waffle and mistakes I have ever set eyes on.

Again, mere opinion.
Rather than more opinion, why not a cognizent argument with some factual basis as to their weakness.

To suggest BHP have a PER of 2, and that Rinker would need to drop to $2.65 before anyone buy it is quite simply lunacy.

Again inaccurate.
I stated that at the price of $2.65, there would be a 50% discount from intrinsic value In addition, I provided a range, thus even $2.65 is an incorrect statement. Your lack of attention to detail delineates you as the speculator that you undoubtably are. In addition I stated before I would buy it not that there would be no takers for the stock.
True value investors would be waiting for lower prices, as of course, we can earn a better and safer return.

There is not one ASX stock that you can recommend anyone buy, so why on earth 'value' any of them.

Because I was interested in seeing what you could bring to the party.
On the evidence offered so far, not seemingly a great deal.

jog on
d998

 

[Realist]

True value investors would be waiting for lower prices, as of course, we can earn a better and safer return.

Rubbish, where can you earn a better and safer return from the ASX?

Your US stocks are not better or safer either, some have made losses, some have a PER of 60 fer christ sakes, and some do not pay dividends.

RIN is superior IMHO to some of the stocks you own.

 

[ducati916]

Realist

Rubbish, where can you earn a better and safer return from the ASX?

Thought we had covered this one.
I do not follow the ASX.

Your US stocks are not better or safer either, some have made losses, some have a PER of 60 fer christ sakes, and some do not pay dividends.

Again as previously detailed, not all the public selections are examples of undervaluations some are examples of *Turnarounds, Recaps, etc*
If you wanted to compare apples to apples, you should check your facts first
This is just a further example of your lack of attention to detail.

RIN is superior IMHO to some of the stocks you own.

As a business, I would agree.
Nowhere in my analysis did I say that the business was a poor one.
If however you are looking to purchase RIN as a legitimate undervaluation the analysis delineates a value range that RIN would become a legitimate undervaluation. This then is very different to the strategy that you are advocating, which is buy a good business at a fair price and hold the business for a very long haul.

This, with the exception of GEICO, was not Grahams strategy.
This of course is Charlie Mungers strategy.
However, this would require that RIN have a competitive advantage that is not easily duplicated by the competition.

Your analysis fails the criteria for identifying an undervaluation.
It fails to provide a logical, progressive, and coherent analysis for buying a business under Mungers strategy.

What are you left with?
A formula approach, that you do not understand the philosophy of, ineptly applied, you in a quote from Munger, have become the person he castigated;

To a man with a hammer, everything looks like a nail

jog on
d998

 

[Fab]

Just a quick question about RIN. I have had RIN for over 10 years and bought at 4.80 not a bad ride nevertheless I now need to sell them. I noticed they are offering a Buy back at the moment.
I am wondering how to participate to this Buy back and is there any interest iin doing so or is it the same as selling this shares by myself on COMMSEC ?

Cheers

 

[brisvegas]

Value = earnings multiplier * (expected dividend + 1/3 expected earnings) + adjustment for asset values

ok just to clarify couple points so i can approach this with as little to and fro as possible . where are we sourcing these expected dividends from along with the forecast earnings ? what makes you trust the source of predictions ? how forward do we look at these projections ? what about risk , debt , tgt market with currency fluct taken into acc. ( not solid on RIN fundies atm but i believe lot of rev from OS ) . i see you are anti housing on other threads and happy to be a renter yet you paradoxically are bullish on a company that relies on this industry . any particular reason for the seemingly contradictory opinions ? i will get into some RIN fundementals when my broker site is back online and we can debate the pros and cons


.......... bris

gone all quiet on this front . ducking and weaving or what ????


................. bris

 

[pacer]

You bunch of analytical boof heads!.......

Buy if want, sell if you want.........

The graph says long term up.....possible short term down if no offer is made.....

Follow the leaders

There are bound to be quite a few take-over offers on the top 200 within the next 2 months, I wont bother to go short for a few more months on anything...look at Coles!

I could have been sucked in to a short on Coles at the wrong time, but I am a big fan of a reverse position at the first sign of that happening.

History always repeats.......beware the uninformed.

Good luck to all who hold....possibly better luck to those who go short now, as an offer for Rinker HAS NOT BEEN MADE!.......

Getting close to a short possy if you ask me, and see it hit $10-11!!!!!!!

Just my opinion......what do I know?

Recon if it hits $10.80 then it's either a buy (short term) or a sell long term to $8....panic can ruin a company.......don't believe that interest rates wont hit 18% again...they could quite easily.

I'm buying silver myself at the moment......................

 

[michael_selway]

You bunch of analytical boof heads!.......

Buy if want, sell if you want.........

The graph says long term up.....possible short term down if no offer is made.....

Follow the leaders

There are bound to be quite a few take-over offers on the top 200 within the next 2 months, I wont bother to go short for a few more months on anything...look at Coles!

I could have been sucked in to a short on Coles at the wrong time, but I am a big fan of a reverse position at the first sign of that happening.

History always repeats.......beware the uninformed.

Good luck to all who hold....possibly better luck to those who go short now, as an offer for Rinker HAS NOT BEEN MADE!.......

Getting close to a short possy if you ask me, and see it hit $10-11!!!!!!!

Just my opinion......what do I know?

Recon if it hits $10.80 then it's either a buy (short term) or a sell long term to $8....panic can ruin a company.......don't believe that interest rates wont hit 18% again...they could quite easily.

I'm buying silver myself at the moment......................

Forward Terminal PE of 10

Earnings and Dividends Forecast (cents per share)
2006 2007 2008 2009
EPS 106.6 122.2 129.6 138.4
DPS 78.0 42.8 45.3 48.4

So I value it as about $14 currently

thx

MS

 

[pch]

You appear to be doing a DCF based on EPS growth and I agree with your number based on your assumptions.. ducati916 on the other hard appears to be doing the buffet style DCF method of growing future earnings by growing ROE which *tends* to come out a lot lower.

Having said that, some of my best performers have been cases, both EPS and ROE models suggested it was seriously undervalued and some of my worst have been EPS only DCF valuations. But to then complicate matters, I have had other great performers that would have never come up on either radar

But to find a buffet style company in the first place that has the sort of ROE he likes filters 90% of the ASX out anyway ;-)

 

[ducati916]

et al

One size analysis, fundamentally has severe restrictions.

RIN, a building company,
NAB, a bank,
BHP, a mining company,
QBE, an insurance company......etc

All have different business models, and thus different analytical techniques are required. This in essence is why Buffett coined the phrase; circle of competence

Without understanding the business model, you won't understand the elements of analysis to focus on when searching for value.

jog on
d998

 

[Realist]

Originally Posted by brisvegas
ok just to clarify couple points so i can approach this with as little to and fro as possible . where are we sourcing these expected dividends from along with the forecast earnings ? what makes you trust the source of predictions ? how forward do we look at these projections ? what about risk , debt , tgt market with currency fluct taken into acc. ( not solid on RIN fundies atm but i believe lot of rev from OS ) . i see you are anti housing on other threads and happy to be a renter yet you paradoxically are bullish on a company that relies on this industry . any particular reason for the seemingly contradictory opinions ? i will get into some RIN fundementals when my broker site is back online and we can debate the pros and cons

.......... bris

Just use current figures, unless you know different.

I am a housing bear, however if a great house in a great suburb was for sale at a very good discount, hell yeah I'd buy it!!

RIN is for sale at a cheap price IMHO.

Also I like to diversify. I have Insurance companies, banks, property, mining etc. even in industries which others deem as poor growth prospects. RIN fits my diversification rule nicely.

 

[pch]

et al

Without understanding the business model, you won't understand the elements of analysis to focus on when searching for value.

jog on
d998

Funny thing is often management and the board doesn't understand the business model either!