Valuable Value Posts

Some recent interesting posts on Value Investing:

Berkshire Hathaway: Almost a screaming buy at more than $100,000 a share
Ask Matt - Matt Krantz - USA Today

For Value Investing, Bittersweet Success
Chet Currier - Bloomberg News

Value Hedge Fund Manager Starts Revolutionary Pay Structure
Blog - Controlled Greed

The Money's in the Scuttlebutt
Greg Guenther - The Sleuth

Buffett, Lynch And Graham Look At Debt
John Reese - Guru Screen - Forbes

Buffett on When to Sell

Buffett on When to Sell

Warren Buffett: The Billionaire Next Door
Airs Monday November 20, 2006
on CNBC, at 8 & 11pm ET

This is a segment of an interview by CNBC's Liz Claman with Warren Buffett, in which they discuss "his gut instincts, his feelings about Wall Street, how he feels when he does a deal, his surprising view about his own tax rate, the music he listens to, the TV he watches."

This particular clip above is brilliant:

"We do not sell good businesses at overvalued prices, we don't get rid of businesses that are mediocre. If they're destined to continuously lose money we get out of them...If they're gonna lose forever."

Buffett seems to be explaining here just how much he stands by his initial convictions: his original decision to buy the stock/company in the first place. And this is how it should be for the value investor. If your initial reasoning was sound, and you bought a good company with a sound business plan, strong financials, and little debt at an undervalued price - you should not be bothered if the price goes down further. In fact - in some instances this is exciting, for it may mean a potential acquisition and/or increased insider buying is in the cards.

Previous related posts:
Bought Buffett's Berkshire Because it's a Bargain

Case Study: Tiens Biotech

Time Travel Investing

End of Summer Reads

Summer Reading, and an MBA

TBV update

Some more news on Tiens Biotech Group USA Inc. (TBV) :

Beacon Equity Research
Kris Goldcross, CFA gave an "outperform" rating and a price target of $12.30 when the current price of TBV was already $6.61, back on May 6, 2006! With the price now at $2.99, and a price/earnings below 8, TBV is really undervalued at the moment.

China Daily
Report from November 3, 2006, by Xiao Wang. The most exciting part of this announcement is TBV's partnership with other strategic clients: "Multinationals such as L'Oreal, Pfizer Pharmaceuticals and Shiseido have hammered out long-term partnerships with Tiens, serving as high-end original equipment manufacturers (OEM) and original design manufacturers (ODM) for Tiens. "

This will raise the company's global standing and goodwill, and only increases the potential for acquisition and/or insider buying if the stock remains this undervalued.

Case Study: Tiens Biotech
The original case study on The Million Dollar Portfolio, a case for value.

Case Study: Aspreva Pharmaceuticals
Another related undervalued healthcare case study, on ASPV.

Case Study: Aspreva Pharmaceuticals

Aspreva Pharmaceuticals Corporation (ASPV) "engages in the identification, development, and commercialization of new indications for approved drugs and late stage drug candidates for patients living with less common diseases." The company is headquartered in Victoria, Canada. The company has 106 employees, and as stated above its focus is on specific niche drugs for patients with uncommon illnesses. Due to the company's location in Canada, an investment in this company is an instant diversification into the Canadian Dollar. In this manner, this is also a form of international diversification, similar to the case study I did on TBV.

Valuable Points
The company has virtually little to no debt.
Price/earnings is very low, at only 5.58.
The short interest as a percentage of public float is 8%, which is extremely high for ASPV, which only has a market capitalization of 642 million.
Its 52-week range is 11.18 - 34.89, which gives this stock some significant potential.
Pre-tax return on capital greater than 100%!!!

Concluding Thoughts
This is an extremely undervalued healthcare company that has relatively little downside due to its very low price earnings and low market capitalization. If the company becomes any more undervalued, it has the potential to be acquired by a larger healthcare company looking to gain snatch up ASPV's expertise in niche disease markets. For example, one could look to Merck's recent $1.1 Billion acquisition of Sirna Therapeutics, whose stock surged 98 percent in after hours trading after the announcement.