Valuations and Brief Thoughts About Vodafone

Recently I decided it was probably time for me to value and analyze each of the companies remaining in my portfolio from before I truly dedicated myself to learning and becoming a “true investor.”  I had never valued any of the companies I am going to be writing about in the next several days.  I have read at least one annual report and one quarterly report, along with a myriad of other articles about each of the companies in the time since I bought them, and I am going to offer my brief thoughts on each.

I am also going to decide if I should keep, buy, or sell any of the companies after determining if I think any of them are under or overvalued.

Vodafone Valuations and brief thoughts

Vodafone (VOD) valuations done on September 10th, 2012.  Valuations in millions of GBP, except per share information, unless otherwise noted.  Valuations done using 2012 10K.

Asset Reproduction Valuation

Assets:			Book Value:		Reproduction Value:
Current Assets
Cash and Cash Equivalents			7138		7138
Short Term Investments			1323		1323
Accounts Receivable (Net)			3885		3302
Inventories			486		243
Prepaid Expenses			3702		1851
Other Current Assets			3491		1746
Total Current Assets			20025		15603
PP&E Net			18655		9328
Equity and Other Investments			35899		17950
Goodwill			38350		15340
Intangible Assets			21164		8466
Deferred Income Taxes			1970		1000
Other Long Term Assets			3482		1741
Total Assets			139545		69427

Number of shares are 5096

Reproduction Value:

• With intangible assets and goodwill: 69427/5096=13.62 GBP per share = $21.80 per share.
• Without intangible assets and goodwill: 45621/5096=8.95 GBP per share = $14.33 per share.

EBIT and Net Cash Valuation

Cash and cash equivalents are 7,138

Short term investments are 5,096

Total current liabilities are 24,025

Cash and cash equivalents + short-term investments – total current liabilities=

• 7,138+1,323-24,025=-15,564
• -15,564/5,096=-3.05 GBP per share=-$4.78 in net cash per share.

Vodafone has an EBIT of 11,187.

5X, 8X, 11X, and 14X EBIT + cash and cash equivalents + short-term investments:

• 5X11,187=55,935+8,461=64,396
• 8X11,187=89,496+8,461=97,957
• 11X11,187=123,057+8,461=131,518
• 14X11,187=156,618+8,461=165,079

• 5X=64,396/5096=12.64 GBP per share=$19.79 per share.
• 8X=97,957/5096=19.22 GBP per share=$30.09 per share.
• 11X=131,518/5096=25.81 GBP per share=$40.41 per share.
• 14X=165,079/5096=32.39 GBP per share=$50.71 per share.

Revenue and EBIT Valuation

				Numbers:
Revenue:				46417
Multiplied By:
Average 6 year EBIT %:				15.87%
Equals:
Estimated EBIT of:				7366.4
Multiplied By:
Assumed Fair Value Multiple of EBIT:				5X
Equals:
Estimated Fair Enterprise Value of VOD:				36832
Plus:
Cash, Cash Equivalents, and Short Term Investments:				8461
Minus:
Total Debt:				34890
Equals:
Estimated Fair Value of Common Equity:				10336
Divided By:
Number of Shares:				5096
Equals:				GBP 2.03 per share=$3.27 per share

The $3.27 per share is my low estimate of value.  My base estimate of value using an 8X multiple was $10.16 per share, and my high estimate of value using an 11X multiple was $17.25 per share.

Price to Book and Tangible Book Valuation

				Numbers:
Book Value:				126431.8
Minus:
Intangibles:				23806
Equals:
Tangible Book Value:				102625.8
Multiplied By:
Industry P/B:				1.7
Equals:
Industry Multiple Implied Fair Value:				174463.8
Multiplied By:
Assumed Multiple as a Percentage of Industry Multiple:				65%
Equals:
Estimated Fair Value of Common Equity:				113401.5
Divided By:
Number of Shares:				5096
Equals:				GBP 22.25 per share=$35.62 per share.

The $35.62 per share is my low estimate of value.  My base estimate of value using a 95% multiple was $52.05 per share and my high estimate using an 125% multiple was $68.49 per share.

FCF and Cash Flow Valuation

				Numbers
Operating Cash Flow:				12755
Minus:
Capital Expenditures:				7852
Equals:
Free Cash Flow:				4903
Divided By:
Industry Median FCF Yield:				6.17%
Equals:
Industry FCF Yield Implied Fair Value:				79465
Multiplied By:
Assumed Required FCF Yield As A % of Industry FCF Yield:				65%
Equals:
Estimated Fair Value of Common Equity of VOD:				51652.25
Divided By:
Number of Shares:				5096
Equals:				GBP 10.14 per share=$16.23 per share.

Vodafone’s FCF yield is 5.41%.  The companies I used as comparisons are Verizon, China Mobile, and AT&T.

The $16.23 per share is my low estimate of value.  My base estimate of value was $23.71 per share and my high estimate was $31.20 per share.

Vodafone’s debt ratios are as follows:

• Current assets to current liabilities: 20025/24025=0.83
• Total debt to equity: 34957/76935=45%
• Total debt to total assets: 34957/139576=25%

Brief Thoughts and Conclusions

Vodafone’s valuations are all over the place from a low of $3.27 a share to a high of $68.49 per share.  My cost basis for VOD is $27.37 per share.

After looking at its margins, reading its annual report and all that I have read since buying into Vodafone, I would use either the 8X EBIT and cash valuation, $30.09 per share, or my low estimate of value in the price to book and tangible book valuation, $35.62 per share, as my estimate of intrinsic value.  I would probably lean towards the $30.09 estimate of intrinsic value just to be safe, meaning that I think Vodafone is about correctly priced.

Knowing what I know now, I would not have bought into Vodafone when I did, or at this time, as it does not meet my minimum 30% margin of safety.   Others reasons I would not buy into it at this time are:

• The high debt levels.
• Massive amounts of cap ex needed constantly.
• The problems that it has had in India and other countries lately
  .

I do not think that Vodafone is a bad company by any stretch of the imagination, I just bought into them at too high of a price and for the wrong reasons; mainly its dividend.

I really like that it is a truly global company with some very good assets, including being a 45% owner of Verizon.

For now I am going to hold onto Vodafone until there is some kind of clarity from Verizon on its dividend payment strategy towards Vodafone, and/or until I find another company to buy as I think I will have a hard time making money at my currently too high cost basis in Vodafone, and I will possibly look to sell my stake in VOD when I find another attractive company.

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Intel’s and my Vision for Education, Profile of Seth Klarman, and Dole news

Intel’s Vision of the future classroom

This is an amazing 3 minute video of Intel’s vision of the future classroom.

Education is one of my few other passions outside of investing.  I have always been a person who loves to learn, but find that our current educational system, from kindergarten to college is extremely antiquated and needs to be massively updated. When I make enough money I going to devote a lot of it to the upcoming education revolution and am going to open up my own school teaching investing, how to manage money, history, science, etc from a young age.

Profile of Seth Klarman

Here is profile of Mr. Klarman that has some interesting tid bits in it.

Dole news

This is mainly an article talking about the potential spin-off again, but this is some new news from the article.

“Combining the packaged foods division with Dole’s Asia operations into a stand-alone entity could be done with an Asia-based company, DeLorenzo said. Another option would be to initiate a joint venture with third parties through an initial public offering.

“We have generated a lot of interest in Asia,” DeLorenzo said. “It is a high growth area for all our businesses. It is more stable than North America and Europe, possibly because it is more demand driven. …. It would make sense in many ways. About 90% of our packaged foods assets are in Asia and many of the products for them are sourced out of Asia.”

 

Here is some more good news from Dole, this time insider buying from Mr. Murdock who already owns around 58%% of the company and is the Chairman and CEO.

Again, too bad I did not have any available cash in my personal investment account to buy Dole as it is now up almost 30% since I bought it in some accounts I manage, ugh.

Alexander and Baldwin: Post spin off analysis and valuation

In my previous article on Alexander and Baldwin, I got into the valuation and analysis of the combined Alexander and Baldwin (ALEX) and Matson (MATX) companies.

In this article I will detail the post spin ALEX, value and analyze the company and, determine if I will be a buyer now.  I will be using newer, and I think better estimates of the land value.

I will also assess and value the non-landholdings of the company.  I will value the buildings they own and their potential value through either sale or rent.  I will also talk about the Agribusiness portion of the company which farms, produces, and sells sugar cane.  The Agribusiness also produces power for some of the land they own.  For a discussion of ALEX in general either view my article listed above or the company website here.

I am now going to detail their individual businesses a bit before the valuations.

Alexander & Baldwin, through its real estate subsidiary A&B Properties Inc., develops and sells real property, primarily in Hawaii, and operates a commercial portfolio comprising nearly 8 million square feet of retail, office and industrial space comprising 45 properties located in Hawaii and in eight states on the U.S. Mainland. A&B Properties also owns over 88,000 acres of land, primarily on the islands of Maui and Kauai.

Much of the landholdings on Maui are farmed by Hawaiian Commercial & Sugar Company (HC&S). On Kauai, McBryde Resources, Inc. leases our 4,000-acre coffee plantation to an international, vertically-integrated coffee company. Both HC&S and McBryde are significant renewable energy producers, generating over 200,000 megawatt hours of electricity from renewable energy in 2011.  Taken from their website here, where you can also go for more information.  Also here is a link for pre-spin ALEX’s annual and quarterly reports.

Valuations done on July 4th 2012.  These valuations are done by me, using my estimates, and are not a recommendation to buy the stock.  Do your own homework.

ALEX own 8,000,000 square feet of commercial, industrial, and retail buildings that I am conservatively valuing at $100 a square foot.  ALEX could also rent out their properties conservatively for $1 a square foot per month.

• 8,000,000 X 100=$800,000,000 in potential building value through sale.
• Or 1 X 8,000,000=$8,000,000 in rent per month from renting the properties.  $8,000,000 X 12 months =$96,000,000 per year in potential rents earned.

ALEX also owns 88,000 acres of land.  However, after doing some further research I now know that 36,000 of that is used in the growing, producing, and selling of sugar cane, and at this time would likely not be sold.

Valuing of the land:

• 88,000 X $6,000=$528,000,000 potential value of all the land.
• 88,000-36,000=52,000 acres of land after taking out the land for sugar cane production.
• 52,000 X $6,000=$312,000,000

If you read my previous article you might have noticed that I upped the per acre price from $5,000 to $6,000 per acre.  I did that because Larry Ellison recently bought 88,000 acres of land in Hawaii for approximately $500 million, which comes out to a per acre price of $5,682 per acre.  I upped  it a bit higher than his price per acre because most of the land ALEX owns in on Maui and Kauai, presumably higher priced locations.  However, I left the price per acre pretty low and am still likely undervaluing the land because I am no Hawaiian real estate expert and I want to be as conservative as possible.

• Number of shares are 42 million.

• 800,000,000 + 528,000,000=$1.328 billion
• 1328/42 =$31.62 per share.
• 800,000,000+ 312,000,00=$1.112 billion
• 1112/42=$26.48 per share.

The $26.48 per share is not including income from sugar cane acreage, production, and sale.  It is not including power production and sale.  The $26.48 per share is just including the 52,000 acres of land that could be sold and the conservative potential of all buildings.  They also have a conservative potential of $96 million incoming rent from those properties if they keep them.

A more moderate to high valuation.

In place of the $1 per square foot per month that was used in the above valuation now we are going to use $2 per square foot per month X 8,000,000 = $16,000,000 per month.  Times that by 12 months to get $192,000,000 in potential rental income per year.

Replacing the $100 per square foot sale price above, we are now going to assume a $200 per square foot sale price.

• 8,000,000X200=$1.6 billion

Still leaving out the sugar cane acreage above and using the same dollar amount for that land potential you get.

• 1.6 billion + 312 million=$1.912 billion
• 1912/42=$45.52 per share.

Again the $45.52 per share is not including the things talked about at the end of the first valuation.

In my opinion ALEX should either sell off or start developing some more of the 88,000 acres of land.  I also think they should keep leasing their buildings because that is huge potential cash flow every year.

Since I am a very conservative investor I use very conservative numbers in my valuations.  I am most likely undervaluing the land at least a little bit, and the buildings probably a little bit more than I should.  However, since I am no Hawaiian real estate expert I need a good margin of safety.  I usually like at the very least a 30% margin of safety and preferably a 50% margin of safety.  I generally use the lowest value I get as my base case, this time the $26.48 per share.   Thus not getting me the margin of safety I need.

Stating that, I still will not be buying into the post-spin ALEX, especially after the stock is up about 30% in the past three trading sessions.  I will continue to research ALEX and I will be waiting for my opportunity when the price goes down.  I am still very intrigued by the land that they own and the potential rental income from the buildings they own.

I did not talk about margins because I am waiting for the 10Q of the new ALEX before I make any judgements on those.  However, if the company is overpriced, like I think this one currently is, I still would not buy even if the margins are great.

I did not talk about the sugar cane and power production portions of the business much because I do not want to count future, highly uncertain earnings from a commodity type business.  I only want to count things that are a little bit more certain like land prices and building prices into this valuation.  Probably a bit too conservative but I want to be safe.  The rest of the company is just icing on the cake to me.

As always feedback is welcome.

Dole VS Chiquita VS Fresh Del Monte (Part 4)

This article is the fourth and final article in the series detailing the businesses of Dole (DOLE), Chiquita (CQB), and Fresh Del Monte (FDP).  If you want to see the valuations and brief descriptions of these companies please view these articles: DOLE, CQB, and FDP.

In this article I will go over the margins of all the companies to determine if there are any sustainable competitive advantages.  I will decide whether I would buy any of these companies as they currently stand, without the possibility of any kind of merger, spin off, or massive asset sales.  I will also look into whether or not a merger between any of the companies would be a good thing.

Before I start with my analysis of the three I need to go back and look into Dole’s total contractual obligations in comparison to Chiquita’s and Fresh Del Monte’s.  At the time I did Dole’s valuations I wasn’t doing as thorough of research as I am doing now, and did not talk about their total obligations in the original article I wrote.

On page 40 of Dole’s 2011 10K they list their total obligations and commitments as of December 31, 2011.  The total obligations and commitments, including debt is $4.68 billion, and over the next two years it comes out to $2.661 billion.  Their current market cap is $765 million. Not a great ratio, but not terrible like Chiquita’s. The total obligations/market cap ratios for all of the companies are:

• Dole: 4680/765=6.12
• Chiquita: 3167/220=14.40
• Fresh Del Monte: 1992/1310=1.52

Fresh Del Monte has by far the most sustainable ratio in my mind and should have no problems if another crisis hits them individually or the economy as a whole.  Dole might be able to make it through another crisis, even if they don’t decide to do some kind of asset sale or spin off like they are looking into right now.  Chiquita’s ratio is horrendous and I would be worried about them if I was a shareholder of theirs.

All of these companies have low amounts of cash and cash equivalents on hand, which is another thing to possibly worry about with Dole and Chiquita if something bad were to happen in the economy.  In any kind of emergency they would most likely either default on some of their obligations,  have to draw down their credit facilities or, try to take on some more debt if they could, most likely on unfavorable terms.

Now let us get to the margins of all three and try to determine if any of them have a competitive advantage.

			Dole (DOLE)		Chiquita (CQB)		Fresh Del Monte (FDP)
Gross Margin (Current)			10.5		12.9		8.8
Gross Margin (5 years ago)			9		12.4		10.8
Gross Margin (10 years ago)			16		16.1		16.1
Op Margin (Current)			2.7		-0.3		3
Op Margin (5 years ago)			1.9		0.7		5.2
Op Margin (10 years ago)			6.5		2.2		10.3
Net Margin (Current)			0.75		0.69		2.84
Net Margin (5 years ago)			-0.83		-1.05		5.34
Net Margin (10 years ago)			0.83		0.91		9.34
FCF/Sales (Current)			-0.58		0.12		2.66
FCF/Sales (5 years ago)			N/A		-0.08		2.42
FCF/Sales (10 years ago)			N/A		2.37		11.86
BV Per Share (Current)			$9.30		$17.42		$30.41
BV Per Share (5 years ago)			N/A		$21.03		$23.65
BV Per Share (10 years ago)			N/A		$15.80		$13.51
ROIC (Current)			2.16		1.53		5.21
ROIC (5 years ago)			-2.12		-2.72		11.66
ROIC (10 years ago)			1.98		1.63		22.56
Insider Ownership (Current)			59.06%		3.33%		35.72%

These companies for the most part all have operations in the same segments and the next table will be showing the margins of those comparable operations.

			Dole		Chiquita		Fresh Del Monte
Total Fresh Fruit EBIT			172		N/A		N/A
Total Fresh Fruit Revenues			5,024		N/A		2,721
Fresh Fruit EBIT Margin			3.42%		N/A		N/A
Total Vegetable EBIT			31		N/A		N/A
Total Vegetable Revenues			1,002		N/A		523
Vegetable EBIT Margin			3.10%		N/A		N/A
Packaged Food EBIT			96.5		N/A		N/A
Packaged Food Revenues			1,197		N/A		355
Packaged Food EBIT Margin			8.10%		N/A		N/A
Total Operations EBIT			300		33.7		116
Total Operations Revenues			7,224		3,139		3,590
Total EBIT Margin			4.15%		1.07%		3.23%

In a perfect world Chiquita and Fresh Del Monte would have broken their operations out further like Dole does.  Instead they choose to combine their operations reporting data, especially the Operating Margin data, otherwise known as EBIT.  So at this point it is impossible for me to break out the data further than it is in the above table.

Taking the above information, combined with the information in the previous articles, I think that I have enough information to make some judgements on the companies.

As things currently stand I would NOT buy Chiquita under any circumstance, not even with the possibility of a spin off or asset sale.  Their low margins, combined with their huge amount of total obligations, and low cash on hand scare me too much to invest in them.  That is not even taking into account the fact that in my valuations I found them to be about fairly valued to slightly undervalued, not nearly enough of a margin of safety for me considering all the risks. I also do not see them being bought out by anyone due to their high amount of total obligations.  The only thing going in their favor is that they are selling for less than book value by a good margin, which is currently $17.42 per share, but at this point it looks to be justified.

Fresh Del Monte is interesting.  They are selling for less than book value by a good margin, which is currently at $30.41 per share, they generally have the best margins of the three companies, and they also have high insider ownership, which I always love.  However, by my estimates they appear to be slightly overvalued at this point, and have low cash on hand.  They are also the company out of the three in the best position to make some acquisitions, in my opinion a merger between Dole and Fresh Del Monte could possibly be a good thing. They have already been buying back a lot of shares and are the only one out of the three to pay a dividend, which are more pluses.  At this point I am not going to buy Fresh Del Monte, but I will wait for an opportunity when they are undervalued and will reassess at that time whether or not I will be a buyer then.

Without the possibility of a spin off or asset sale that I outlined in my original article on Dole, I would not be a buyer into their company right now either.  Pretty much the same problems as Chiquita: high debt/total obligations, low cash, low overall margins.  However, they do have high inside ownership, they are selling at a slight discount to book value, and by my valuations are extremely undervalued.  I do stick to my original assessment about Dole though, that they are a great spin off opportunity if they decide to do a spin off or asset sale.  If they do what I suggested in the original article I think they could unlock value, get rid of a lot of their debt, and become a much more focused and profitable company.  Especially if they put a lot of their resources into the packaged fruit portion of the business, as it has the highest margins in Dole’s operating structure.  Dole also has the 88,000 acres of land that they could sell some of to pay down debts as well.

I did buy half of a position in Dole based on the spin off thesis in my original article.  I am waiting to see if they announce a spin off or asset sale to jump fully into Dole at this point.  They are in the spin off portion of my portfolio which I plan to hold for 6 months to several years.  I do not consider them a long term buy and hold for decades company.

It also appears to me that none of the companies have any kind of sustainable competitive advantage, with their wildly fluctuating margins over the past 10 years, and no one becoming dominant.

I hope everyone has enjoyed and learned something from the analysis and valuation series on Dole, Chiquita, and Fresh Del Monte, and I look forward to some feedback.

Dole Valuations

Here are my valuations of Dole (DOLE)

Dole asset valuation done on 5-19-2012.  All #’s in millions of $.  Using March 2012 10Q and 2011 10K.

These valuations are done by me, using my estimates, and is not a recommendation for you to buy the stock. DO YOUR OWN HOMEWORK.

Assets:                                     Book Value:                               Reproduction Value:

Current Assets

Cash                                            106                                                   106

Marketable Securities                     0                                                       0

Accounts Receivable (net)          739                                                   628

Inventories                                   877                                                   438.5

Prepaid Expenses                        64                                                      32

Deferred taxes-tax liability           185                                                   55.5

Total CA                                     1,971                                                1,260

PP&E Net                                    901                                                   540.6

Goodwill                                      413                                                     124

Intangible Assets                        740                                                     370

689 million of IA is their estimate of what the DOLE brand is worth.

Total Assets                             4,025                                                 2,294.6

Number of shares = 88m

With IA: 4,025/88=$45.74 per sahre

Without IA: 3,285/88=$37.33 per share

Reproduction Value

With IA 2294.6/88=$26.08 per share

Without IA 1924.6/88=$21.88 per share.

Current share price=$8.96 per share

Second Dole valuation:

Done on 5-19-2012 using March 2012 10Q and 2011 10K.  Numbers in millions of $.

Cash and cash equivalents=106 + short term investments of 0=106

Number of shares=88

Total Current Liabilities=1,090

Short term investments+cash and cash equivalents-current liabiliites=-984

-984/88= -$11.18 in net cash per share

EBIT of 300 taken from 2011 10K

5X, 10X, and 14X EBIT= 5X=1,500, 10X=3,000, 14X=4,200

1,500 + C &CE above of 106=1606, 3,000 +106=3,106, 4,200+106=4,306

1606/88=$18.25 per share

3106/88=$35.05 per share

4306/88=$48.93 per share

Current price is $8.96 per share

Current market cap=782.9 million

EV=MKT cap+debt,minority interest & preferred shares- total C&CE

EV=782.9+1626=39=0-106=3,381 m                                      EV/EBIT=11.27

Dole owns 117,000 acres of land, mostly in Hawaii. 117,000 X $5000, which I think is a conservative estimate of land prices in Hawaii=$585 million in potential worth of land.

585/88= $6.65 per share potential of land per share, with again a current share price of $8.96 per share.

Subtracting my estimate of their potential land value you get the rest of Dole, cash, and debt for $2.31.

Being a very conservative investor, normally I would never touch a stock with this much debt in relation to market cap, EBIT, cash on hand, and a negative net cash number, even with the massive margin of safety.

Another knock against it is that it is a fresh fruit business, which makes it a commodity business leading to widely fluctuating prices, revenues, and margins.

However, the management has has been paying down debt slowly over the past several years. Dole is also currently under strategic review by their directors and management to see how they can unlock lost value and pay down debt at the same time.

http://seekingalpha.com/news-article/2700131-dole-food-company-inc-announces-first-quarter-2012-results-and-strategic-business-review

In the article they state that “As part of this review, the alternatives we may consider include a full or partial separation of one or more of our businesses through a spin-off or other capital markets transaction, as well as other alternatives that will enhance shareholder value. We are committed to enhancing shareholder value and this review is a company priority.”

Normally I would take the above statement with a grain of salt but their biggest shareholder Mr. David Murdock currently owns 58.1% of all shares.  He originally brought Dole public again in 2009 at a price of $12.50 per share meaning he has already lost several hundreds of millions of dollars.  Obviously he would want to do what is in his own self interest and hopefully what is best for the shareholders to make that money back, and unlock further value.

Leading me to believe that they are going to find under their strategic review that they are either going to sell off some assets, including some of the land, or more likely spin off one or more companies to help pay down some of their debt.

Personally I think they should move most of their resources into the packaged fruits section of their business as it has the highest margins by far, concentrate less on the fresh fruit section by selling or spinning off at least a portion of that business , sell or spin off the fresh vegetable section outright, and either lease or sell part of their land holdings which could substantially pay down debt and raise the stock price.  They would also be a more focused company if the above were to occur as well.

Again feel free to give feedback.

Current Portfolio

Here is an overview of my current portfolio: Dividends are reinvested on all stocks that have dividends except KMR, was told KMR does not allow partial shares to be reinvested by my broker.

Portion bought before doing any valuations and less research than I am doing now. Lessons to be learned.

Giant Interactive (GA) 34 shares originally acquired 20 shares in November 2010.  Will get back to later

Intel Corp (INTC) 15 shares bought originally at a cost basis of $19.72

Kinder Morgan Management (KMR) bought 5 shares at a cost basis of $62.50

Main Street Capital (MAIN) bought 15 shares originally at a cost basis of $18.73

Altria (MO) bought 11 shares originally at $26.91

Philip Morris (PM) bought 5 shares originally at $69

Taseko Mines (TGB) have 70 shares total now at a cost basis of $4.77, ouch, will get back to later

Universal Insurance Holdings (UVE) have 49 total shares now at a cost basis of $4.85

Vodafone (VOD) bought 11 shares originally at $26.21

Stocks after valuation and now doing a lot more research

Vivendi (VIVHY) 32 shares at $18.35

Dole (DOLE) 58 shares at $8.74 owned in retirement portfolios that I manage for others.

Also own Vivendi 62 shares at $16.19 in retirement portfolios that I manage for others.

I wish I would have been doing valuations and the amount of research I am doing now from the beginning of my investing journey, I would have saved myself a lot of money, around $600.  Would have stopped me from buying a lot of overvalued companies and bad companies.  Most of the money I lost was when I first started and about half of my portfolio was in Chinese small caps ouch again, which brings us back to GA.

I just sold my entire position of 34 shares in GA, the other 14 shares were from a special dividend paid and a regular dividend paid.  I did some valuations of GA yesterday and got a reproduction value of $1.45 per share.  If it was selling at 5X EBIT and 10X EBIT I got prices of $3.88 and $7.77 per share respectively.  I try to be very conservative in my valuations so I get the biggest margin of safety, and hopefully a bigger return later on.  I usually won’t buy now unless there is a 50% or greater margin of safety.

Not good since my cost basis even after the special dividends was around $6 per share for GA, remember I bought GA before I started doing valuations or the amount of research I am doing now.  So even if it was selling at 10X EBIT it would not have met my criteria now of the 50% margin of safety.

Taseko Mines is kind of in the same realm my cost basis now is $4.77 per share at 70 shares, bought all shares before doing any valuations, now I get a reproduction value of $3.70 per share.  So not only will I most likely lose money on this stock no matter what happens, even if the Prosperity mine that would be a gold and copper mine if it is approved, gets approved I still would only make a minimal amount of money due to my high cost basis and lack of margin of safety.

The lesson here is to get decent at some valuation techniques buy at a margin of safety and hold and reinvest the dividends if they have dividends.

Oh and don’t have half of your portfolio in Chinese small caps as a beginning investor when you aren’t doing valuations or in depth research.

My next post will be going over my detailed valuations of Vivendi and Dole, my reasonings for buying them, how long I plan to hold them, and which part of the portfolio both with be in.