Wednesday, February 22, 2006

Martin Whitman's rule of thumb for valuation of stocks

Here are Martin Whitman's ( a legendary value investor) rule of thumb for evaluation of stocks:

1. Financial-services companies and depositories: Stated book value.
2. Small banks: 80% of book value.
3. Mortgage portfolio: Calculate yield to maturity and perform credit analysis.
4. Financial-guaranty insurers: Adjusted book value - a publicly disclosed number that is book value plus the equity in the present value of certain future premiums.
5. Insurance companies: Adjusted book value.
6. Real estate companies: Private appraisal value or market value.
7. Real Estate (REITs): Appraisal value or discounted present value of cash flow from operations.
6. Broker/dealer and asset managers: Tangible book value plus 2% of AUM.
7. Operating companies: 10 times peak earnings or below "net asset value."
8. Tech companies: 2 times book value, less than 10 times peak earnings, 2 times revenue and cash larger than the book value of all liabilities.

Read the whole article by Brian Zen here.

What will be of interest to us are the rules for valuation of banks and tech companies. I have been searching for a reliable method for valuation of banks based on Shankar's comments on valuation of banking stocks though have not come across anything reliable so far.

4 comments:

Shankar said...

Prasanth, have you looked at REITs? The last time I sold one, the client wanted to offer me an i-pod ... he made 48% in a single year. That was the 3-yr Japanese REIT (bundle of 4 property funds).

Very interesting investment avenue and rather profitable !!!

Warm Regards
Shankar

Prasanth said...

REIT's are an interesting concept and am waiting for them to be introduced in India. HDFC had come out with a real-estate fund but that is only for HNI's and minimum investment was something like 1 million USD

Harsha said...

I eagarly waited to hear about REITs in budget for retail investors. there are scores of un-registered REITs in India, esp. they are quite known in Gujarat cities like rajkot, surat etc. I can't comment on profits margin since i happen to see real estate prices in bangalore where my prime interest lies crashed twice in last 10 years by 30-50% from their highs. yes, they provide liquidity, the only advantage i see than going single, after all my funds may hardly fetch few sq.feet in the heart of bangalore.

Anonymous said...

4d影院
动感影院
厨房设备
油烟净化器
风柜
瑜伽
北京瑜伽
瑜伽教练培训
肚皮舞
肚皮舞培训
猎头
猎头公司
猎头顾问
广州猎头
上海猎头
北京猎头
发电机
发电机组
发电机出租
发电设备
发电机租赁
租赁发电机
康明斯
出租发电机
不锈钢水箱
防雷
防雷器
职业装
大屏幕
快速熔断器
高压熔断器
低压熔断器
熔断器
按钮
塔钟
法语
西服
西装
按钮开关
船型开关
微动开关
钥匙开关
旋转开关
润滑油
连接器
3C代理
强制认证
新开传奇私服
日光温室
节水
rohs认证
传奇私服
最新传奇私服
新开传奇私服
新开传奇
新开私服
跑步机
丰胸
婷美|婷美内衣
按摩椅
成人用品
血糖仪
血压计
减肥|瘦身
按摩椅
东方神
丽立美
足浴盆
高佰增高鞋
增高鞋
隐形增高鞋
纤诗婷
矫形内衣
如烟
气血循环机
爵士纯烟
背背佳
紫环
颈椎治疗仪
疯狂甩脂机
瘦身
甩脂机
减肥
锅王
丽姿
婷美锁脂定型衣
婷美锁脂定型内衣
大长今
喜来健
健尔马鼻炎仪
眼保姆
钻石炉

手机恋人
正大不老
血压计
血糖仪
生态餐厅
汽车进口
法语培训
北京婚庆
北京婚庆公司
婚纱摄影
最新传奇私服
噪音
消音
山东助听器信息网
上海助听器总汇
北京助听器
助听器
贵州助听器信息港
名品助听器(南京)直销店
广西助听器验配网
杭州 助听器验配中心
广东 助听器总汇
海参
紫外线消毒器|搪瓷水箱
进口轴承
轴承
进口轴承
玻璃钢水箱|无负压
进口轴承
网站优化|google优化|google推广|google排名


网站建设 北京|北京网页设计|北京网站制作|北京网站推广
北京网站建设|双线空间
虚拟主机|双线空间|asp空间|
非油品
中石化
冬虫夏草