Assured Guaranty ticker AGO a "cannibal" that is shooting fish in a barrel.

“When companies with outstanding businesses and comfortable financial positions find their shares selling far below intrinsic value in the marketplace, no alternative action can benefit shareholders as surely as repurchases.”

--Warren Buffett, 1984 Berkshire Hathaway Annual Report

“Pay attention to the cannibals.”

-- Charlie Munger

Assured Guaranty has $6 722m in equity (book value) and 99m shares outstanding.

$6 722m book divided by 99m shares = $68 book value per share.

The share price is $46 per share and the company is buying back $300m in shares. 

Equity will decrease by $300m to $6 422m due to money being spent on shares. At the price, $300m / $46 per share, they can buy back 6,5m shares. Bringing the share count down to 99m - 6,5m = 92,5m shares

New book value per share: $6 422m / 92,5m = $69,4 a 2% increase.

Earnings per share should increase by 7% assuming the decrease in book value doesn't hurt profits. 

Like shooting fish in a barrel with the water taken out. 

Royal Dutch Shell $RDS Benjamin Graham valuation

Royal Dutch Shell's share price is lower than in 2002, but if you have owned the stock and reinvested dividends than you would have made money. The current sales are quite incredible at $390b last year, comparable to the Gross Domestic Product of countries like Norway or Austria.
SECTOR: [PASS]  RDS.A is neither a technology nor financial Company, and therefore this methodology is applicable. 

SALES: [PASS] The investor must select companies of "adequate size". This includes companies with annual sales greater than €260 million. RDS.A's sales of $388,000 million, based on 2018 sales, pass this test.

CURRENT RATIO: [FAIL] The current ratio must be greater than or equal to 2. Companies that meet this criterion are typically financially secure and defensive. RDS.A's current ratio $93,000m/$84,000m of 1.1 fails the test.

LONG-TERM DEBT IN RELATION TO NET CURRENT ASSETS: [FAIL] For industrial companies, long-term debt must not exceed net current assets (current assets minus current liabilities). Companies that do not meet this criterion lack the financial stability that this methodology likes to see. The long-term debt for RDS.A is $128,000 million, while the net current assets are $9,000 million. RDS.A fails this test.

LONG-TERM EPS GROWTH: [FAIL] Companies must increase their EPS by at least 30% over a ten-year period and EPS must not have been negative for any year within the last 5 years. Companies with this type of growth tend to be financially secure and have proven themselves over time. RDS.A's EPS decline over that period fails the EPS growth test.

EARNINGS YIELD:  [PASS] The Earnings/Price (inverse P/E) %, based on the lesser of the current Earnings Yield or the Yield using average earnings over the last 3 fiscal years, must be "acceptable", which this methodology states is greater than 6,5%. Stocks with higher earnings yields are more defensive by nature. RDS.A's E/P of 8% (using the average of the last 3 years earnings) passes this test.

Graham Number value: [PASS] The Price/Book ratio must also be reasonable. That is the Graham number value must be greater than the market price. RDS.A has a Graham number of √(15 x €2,2 EPS x 1,5 x €22 Book Value) = €32 and passes this test.

Dividend: 1,7/24 = 7% but the oil and gas prices have to not decrease too much for Shell to be able to keep paying this dividend.

Stand augustus 2019, Inleg EUR 3 250, Graham Waarde EUR 6 478, Korting 46%

De koers van ASML is van EUR 35 naar EUR 75 gestegen iets boven de Graham Waarde en we hebben bijna alles verkocht. We hebben United Natural Foods bijgekocht dat nu heel goedkoop lijkt te zijn. Een BOM (Bank of Montreal) analist Kelly Bania zegt dat het maar $5 waard is per aandeel, hoewel ze zei 2 jaar geleden dat het $50 waard was. Onze schatting is $37 en de koers was vrijdag even $7,60 ... Interessant. Ook de koers van NN Groep is gedaald en we hebben bijgekocht. Daardoor is de Graham Waarde gestegen evenals de Korting. Als het goed blijft gaan met United Natural Foods, dan is het van belang om niet te snel te verkopen. => Marshmellow Test.

Stand juli 2019, Inleg EUR 3 200, Graham Waarde EUR 6 173, Korting 42%

Steinhoff had slechte resultaten in 2018, de schulden zijn sterk gestegen, het draait verlies. Graham Waarde schatting is door Yves Viegen op 0,- gezet en we gaan misschien Steinhoff verkopen, afhankelijk van een Strawpoll dat sluit vanavond om 22:22. United Natural Foods (UNFI) had een goede kwartaal maar de koers is gedaald van $15 in februari naar $8,20 afgelopen maand, waardoor we aandelen voordelig konden inkopen. Ook Cato Corp lijkt voordelig op dit moment, met een EBIT/EV Earnings Yield van 33% en een dividend van 11%. We hebben Thalassa Holdings (met moeite) verkocht omdat het niet winstgevend is na de verkoop van de hoofdactiviteit en hebben B&S Group uit Dordrecht gekocht een bedrijf die sterk groeit en een hoge rendement op boekwaarde heeft (30% Return on Equity) maar een lagere Graham waarde.

Stand juni 2019, Inleg EUR 3 150, Graham Waarde EUR 6 038, Korting 43%

We proberen Thalassa Holdings te verkopen, maar het is niet liquide. Er worden (bijna) geen aandelen verhandeld. We hebben veel andelen NN Groep bijgekocht. Nieuw is Nederlandse handelsbedrijf B&S Group. De koers van United Natural Foods (UNFI) is (weer) sterk gedaald,  UNFI kwartaal cijfers komen vanavond na sluiting van de Amerikaanse beurs.
Opvallend is de hoge korting op dit moment.

Bubble watch 2019 WeWork and The Rabbit

It is 2 decades since the dotcom bubble and with hindsight it is easy to see how ridiculous market caps of Cisco Systems et al were in the year 2000 by using Peter Lynch charts.
Yesterday Jeff Koon's Rabbit was sold for $91m the highest price ever for a living artist, beating Hockney.
WeWork has filed for a >$50b IPO.
The company is seen as a competitor of Regus office space rental, but is also a social network based on the kibbutz and commune childhoods of the founders.
But just to get an idea of orders of magnitude, some back of the envelope math:
WeWork rents out 1m Square meters of office space. Say they earn a hefty net profit of €100/m per year, then earnings would be $100m multiple by a multiple of 20 and you get an intrinsic value guesstimate of $2b.
The IPO is 25x...

Another angle: WeWork has 400k members. What are investors paying per member?
Price $50b / 400k = One Hundred and Twenty-Five Thousand Dollars per member.
Life Time Value? Membership is $50 per month x 12 months is $600 per year. Times 10 = Six Thousand Dollars and that's Sales not Net Profit...
Also 25x too expensive.

One could argue WeWork is part of a "Unicorn" bubble. Check back in the year 2029. Also curious to see Aswath Damadorans take at Musing on Markets.

Stand mei 2019, Inleg €3 100, Graham Waarde €5 942, korting 41%

We hebben onder anderen NN Group bijgekocht en hebben weer Hibbett Sports gekocht.