We earlier wrote an aricle on Jim Chanos’ discussing five different value traps (link here.)
The five stocks Chanos mentioned were: CONSOL Energy Inc. (NYSE:CNX), Petroleo Brasileiro SA (NYSE:PBR), Hewlett-Packard Company (NYSE:HPQ), Coinstar, Inc. (NASDAQ:CSTR), Banco Santander, S.A. (NYSE:SAN), and the Australian-based Fortescue Metals Group Limited (ASX:FMG). He also made reference to Best Buy Co., Inc. (NYSE:BBY)
Jim Chanos describes the following characteristics among value STOCKS:
Predictable, consistent cash flow
•Defensive and/or defensible business
•Not dependent on superior management
•Low/reasonable valuation
•Margin of safety using many metrics
•Reliable, transparent financial statements
Chanos lists these traits among VALUE TRAPS:
•Cyclical and/or overly dependent on one product
•Hindsight drives expectations
•Marquis management and/or famous investor(s)
•Appears cheap using management?s metric
•Accounting issues
Below is the full presentation on Scribd Courtesy of Vitaly Katsenelson :
98208144 VALUExVail 2012 James Chanos
Disclosure: No position in any companies mentioned
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