Tangible Book Value was a concept important to Ben Graham,
often considered the founder of value investing. Because it helps
investors identify cheap stocks, GuruFocus has included it on the
, which automatically finds important data about the stocks in
each gurus' portfolio.
Tangible Book Value is defined as book value minus intangible
assets such as goodwill. It essentially shows the amount that
would go to shareholders should the company go bankrupt and
liquidate its assets. It does not include intangible assets
since, valuable though they may be, they cannot be sold if the
company goes out of business.
Ben Graham advised to only purchase stocks trading at two-thirds
of tangible book value per share.
, founder of Fairfax Financial and Ben Graham devotee, has
several stocks in his portfolio that, if not at two-thirds of
tangible book value, are trading for at least less than tangible
These stocks are:
|Research In Motion (
|CFS Bancorp (
|Patterson-UTI Energy (
|Nam Tai Electronics (
|Old Republic International (
Tangible book value is one metric to consider when deciding
whether to buy a stock. Here is
Bill Ackman commenting on Watsa's holding
), showing how he considers tangible book value in a broader
Citi remains extremely cheap relative to our estimate of
intrinsic value - it trades at less than 60% of tangible book
value, about six times last year's underlying earnings per share
and about four times normalized earnings per share after giving
credit to its net tax assets and excess capital.
The intrinsic value of Citi has increased meaningfully over the
course of our ownership of the bank while the stock price has
declined substantially. We believe that the continued generation
of profits and increase in growth of tangible book value will
ultimately cause investors to revalue the bank at prices
approaching its intrinsic value.
See more valuations of Watsa's stocks
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