Value Investing

Investing Checklist: ABBA – Accident; Bird in Hand

Investing Checklist: ABBA – Accident; Bird in Hand by CSInvesting

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Investing Checklist (Helpful)

ABBA – Accident (Our competitive advantage on the purchase)

  • Purpose is to determine why the seller does not care about the price they receive hence giving us a competitive advantage on the purchase
Is this an accident, if so, what went wrong (for example, a dividend cut, earnings miss)
Is this a region or industry that is currently unpopular? Why? Is there any reason to expect some type of reversion to the mean?
Is this a special situation such as a spinoff, rights issue, emergence from bankruptcy, index deletion, restructuring, tax loss selling
Is this an underfollowed stock? How many analysts cover it? Why do I think it is underfollowed?
Or do I simply think I understand the situation better than the market. Why?
Have we reach the point of maximum pessimism and if so, why? (include thoughts on why any negative market views are incorrect)

ABBA - Bird in Hand (What do we think the company is worth)

  • Purpose is to determine a value, preferably based on assets, of the company at this time.
Which valuation approach is most applicable (Liquidation value/Replacement Value/Private Market value/Sum of the Parts) Why?
Do any of the other approaches suggest preferred approach is unrealistic
Have there been any m&a transactions in the last 3 years and if so, what are the details of the prices paid
What prices do similar companies trade at in the marketplace

Extra assets

Are there any extra assets such as vacant land, investments and if so, what is the approximate value (before and after tax)
Is the company divisible meaning parts (or a division) could be sold without hurting the core (for example, multiple radio stations vs single source mfg facility)
Are any segments/product lines/divisions losing moneyWhat are the net assets tied up in this segment/product line

Is there a plan to dispose of this segment or line in the next 3 years

What will be the proceeds and impact if this segment/line is disposed of

Is there hidden value in their distribution channel (dealer organization), licenses, patents
Is there any hidden value or liability in the cost or structure of debt
Off balance sheet liabilities such as:Leases (incl any known closures)

Guarantees incl investment returns

Environmental

Litigation

Derivatives

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Investing Checklist: ABBA - Accident; Bird in Hand