Recognizing Value Situations

Recognizing Value Situations

Value comes wrapped in many different packages. The common is the growth case through normal business results, where solid and improving business fundamentals and intangibles point to solid business growh down the road, and where the market has undervalued that growth. That's arguably the most clear-cut, least risky, and easiest-to-understand scenario.

But other situations do present themselves, and although they may take weeks of professional-level analysis to fully grasp, they can be quite interesting. And in a few cases, they may be as easily justified by your own observations, common sense, and gut feeling as by the numbers.

In general, you're encouraged to be a do-it-yourselfer. But in many of the special situations, do-it-yourself may not be practical. Some of these value drivers can be well hidden and subjective - like a company's breakup value. They often turn into value not through normal business results but by being unlocked through acquisitions and restructurings. For these situations it makes sense to rely a bit more on industry professionals and analysts, who have access to key, paid-for data and a lot of historical precident. They can also pick up the phone and call the company itself or others who may have interest in the assets.

Smart value investors know when to - and when not to- rely on the work of others.


Also read:
Recognizing Value Situations
Recognizing Value Situations - Growth at a Reasonable Price
Recognizing Value Situations - The Fire Sale
Recognizing Value Situations - The Asset Play
Recognizing Value Situations - Growth Kickers
Recognizing Value Situations - Turning the Ship Around
Recognizing Value Situations - Cyclical Plays
Recognizing Value Situations - Smoke and Mirrors