what computer-screen techniques can be used in identifying those stocks?
if (Stock.getPrice() < ((Stock.getAssets() - Stock.getLiabilities())/Stock.getSharesOutstanding()) * fudgeFactor) then { myPortfolio.buy(Stock) }
Ha ha, bchadwick , can you send me the .EXE file? It’s visual basic or c++?
I’m a java guy. It’s my .main() thing. 
It’s hard because liquidation value isn’t really an accounting term. Ben Graham used to use net current assets as a proxy for liquidation value.
What about Six Flags, Ticker:SIX ? Current Mkt Cap is only 100MM. You have to think that from all the real estate they own and the value of the parks sold at liquidation would be a lot more than their current mkt cap.
YEah, right. Who would buy that land, and what would they do with it to make a better return than Six Flags? Maybe more condos?
You could look for companies where cash + inventories - all liabilities - market cap < 0. Maybe haircut receivables 15-25% if you like. Not perfect but it’s a start. Knowledge about whether their equipment has any value or low value real estate would be very helpful, but is generally impossible to determine from SEC fillings.
Chuckrox8 Wrote: ------------------------------------------------------- > What about Six Flags, Ticker:SIX ? Current Mkt > Cap is only 100MM. You have to think that from > all the real estate they own and the value of the > parks sold at liquidation would be a lot more than > their current mkt cap. You’re missing the liability part of the balance sheet. I know nothing about SIX, but a simple way to look at it is the liquidation value only flows to equity in so far as its above and beyond what is needed to pay claims against the firm.
A better example would be Arctic Act (ACAT). Earlier this year you could have bought them at a $120M valuation, when they had current assets - total liabilities of $102M. They also had other tangible assets of about $153M, meaning you can apply a 90% haircut to those assets and and still be made whole.
I was once looking at a rail company that if you took the weight of a box car x the number of box cars they owned x the price of steel, you got about 80-90% of the market value of the company. Can’t remember the name, sorry.
you could look at IKNX when it sells in the 6 to 7 range. If you take liquid assets and the estimated value of the building they purchased 42 years ago you dont need much in earnings…
Stock is completely illiquid… its only had 3 days with volume over 10k in the past 6 months. Unless you’re taking out the company its not something I’d want to be involved in
you have to look at EV first of all, not market cap. quick and dirty would be to screen Assets - Intangible Assets - Liabilities - EV. If this is positive to slightly negative you have to do your homework. some assets aren’t marked to market (remember Sears report with value between $80-130 b/c of land value). so that screen would not capture it… also could be the screen is sector focused and this could kill you if the sector blew up (ie airlines) for instance if airline XYZ came up on the screen but so did 5 other airlines then you would have to discount those assets b/c in a fire sale, those assets aren’t getting BV. Also, sometimes these screens are much more valuable for secured bond analysis… ie if a bond is trading at significant discount and you think the assets are solid, then that’s an opportunity. too many times have I seen bondholders force bankruptcy (which they do have the right to do if company defaults) and make out better on a reorg in some form of equity issuance. (bondholders who bought <60-70)… Common holders get $0, bondholders make bank.
Of course it is illiquid…I never said otherwise, but that plays in favor as well on the upside. If you can buy in a good value range, the liquidity doesnt concern me.
It’s Seth Klarman who said computer-screen techniques can be used in identifying those stocks but he didn’t specify what program. I guess he didn’t want to tell us.
cfafrank - Klarman was most likely referring to blank check companies. companies formed to raise cash for the purpose of acquiring, through merger, capital stock exchange, asset acquisition, etc. these blank check companies typically have a drop dead date at which time if no business combo has materialized…the company is liquidated…you can sometimes find these little blank check companies selling at a discount to their liquidation value.
SPACs always sell at a discount to liquidation. Problem is $.40 warrants make the yield crappy.
did you see marathon just completed the GSL acquisition?
I did but I didn’t calculate how much management had to buy and how much promote they gave up. Looked like a lot.