Berkshire shares are trading near their lowest valuation in decades: close to 1.1 times book value, versus its average valuation of about 1.6 times book value over the past two decades.
There is also a lack of transparency and quantitative assessment of the considerable Judgment used to price test the CLO book given the inherent valuation uncertainty with the positions.
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Without a valuation higher than book value, banks are less likely to complete acquisitions that are considered accretive to shareholders.
Presently, the premium over book value for the market is 1.5 times, a reasonable valuation, but in 1982 stocks sold down to book value.
Unlike the valuation methods based on book value alone, it takes into account the earnings power.
On a price to tangible book value, BAC stacks up well against its competition on a valuation basis, and trades at a bigger discount to tangible book value than all but Citibank.
But the college would have to value the gift using an IRS-approved appraisal, which is typically lower than book value and vastly lower than the valuation you'd get on a frothy Nasdaq.
Stack looks at historical measures of valuation: price-to-book ratios, price-to-dividend ratios and price-to-earnings ratios.
There is no graph of the cyclically adjusted price-earnings ratio, another valuation measure, in its presentation book, although the subject did arise in questions at the conference: David Kostin, a strategist, said Wall Street was slightly above fair value on this measure.
Snowling ticks off other advantages for Sallie: low interest rate risk (given government guarantees), profit growth expectations in the 15% range, a rich return on equity (net income divided by average book value) of 38%, and a cheap valuation relative to history and the broader market.
Finally, I set the valuation limits at a maximum price-to-book ratio of 4.0 and a maximum price-earnings ratio of 25.0.
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This valuation gives it a 0.8 price to economic book value ratio, implying that the market expects a permanent 20% decline in NOPAT for SNDK. In the short term it is possible that SNDK might experience a decline in NOPAT, but over the long term it is hard to imagine this company experiencing the kind of permanent decline that its share price implies.
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Two years from now investors will look back at 2009's valuation--40% of revenue, 80% of book value--and shake their heads.
Mr Osborne will also say the sale's valuation of Northern Rock's "price-to-book value ratio" - that is, its assets minus its liabilities - is higher than peers Barclays, Lloyds TSB or the Royal Bank of Scotland.
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Subscribers to White's research reports--a separate business from his management operation--each month receive in the mail a fat book with hundreds of pages of nothing but numbers, including price and valuation data on more than 2, 500 stocks, along with his analysts' recommendations.
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