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© 2012 Boyar's Intrinsic Value Research LLC . All rights reserved. |
Research Methodology |
Boyar Research’s Investment Methodology |
Boyar Research views a corporation and its asset base in the same manner a business executive would evaluate it. We take the balance sheet, tear it apart, and reconstruct it in accordance with economic reality rather than GAAP accounting. If we can purchase assets at significant discounts to their intrinsic values, we believe that over time, either the market will accurately reflect those values, or the assets of the corporation will be acquired by a third party. It is interesting to note that approximately 40%* of the companies profiled in AAF since 1975 have been acquired or
liquidated, the vast majority at significantly higher prices then when originally probed. We seek to find such opportunities across the market cap spectrum and within a wide variety of industries. Boyar Research mainly publishes reports on companies whose intrinsic value we believed to be significantly higher than their current market value. In addition, Boyar Research may publish reports on companies or industries that we think are significantly overvalued. To receive an example of a report on an industry we believe was overvalued please click here. STOCK SELECTION STRATEGIES In seeking out companies that trade at attractive valuations, we make use of the following strategies: |
Franchise Approach A number of companies have, over time, created valuable consumer franchises. Their products are recognized easily by consumers around the world. Such franchises are virtually impossible for a potential competitor to duplicate. These "franchise" companies often raise prices or even charge a premium for their products or services without losing market share. The value of this competitive advantage may not be adequately reflected in the price of the company's shares. |
"Hidden" Asset Method "Hidden" assets are assets whose current values are undervalued on a company's financial statements-a situation which may lead to a disparity between market value and intrinsic worth. Hidden assets include real estate, reserves of natural resources, cellular or cable franchises, and inventory reserves resulting from the last-in, first-out method of inventory accounting. Asset Analysis Focus adjusts the value of these assets to their current market value to calculate the intrinsic worth of the company, which may be much higher than the value the stock market accords them. |
Restructuring Plays, Breakups, and Spinoffs A company interested in enhancing shareholder value may spin off a portion of its assets to current stockholders through the creation of a new public entity. The common stock of the newly spunoff company may trade temporarily at a substantial discount to its underlying NAV. This is in part because this new entity is not immediately followed by Wall Street analysts. However, the newly focused "pure play" companies often perform well and soon receive more coverage than they ever would have as one ungainly and difficult to analyze conglomerates. |
Business Value Method Excessive pessimism about a particular industry or a specific company may result in extreme disparities between the stock market value of the company and the price that would be placed upon the company if the entire enterprise were acquired by a knowledgeable private investor. When employing this method of valuation, Asset Analysis Focus considers the subject company's historical earnings power, present product mix and financial strength as well as the prices at which similar companies have been acquired in the recent past. Asset Analysis Focus's findings help place an appropriate value on the shares of the subject company. |
Catalysts and Triggers We prefer to invest in companies whose intrinsic value is likely to be realized via one or more significant corporate events, including the following: -Acquisitions, Restructurings, or Liquidations -Spin-Offs -Change in Leadership (Octogenarian Effect) -Corporate Buy-Backs -Changing Corporate Governance |
Fallen Angels Well known companies that were once the "darlings" of Wall Street may fall out of favor with the investment community, causing their stock prices to plummet to unrealistically low levels. Asset Analysis Focus may issue a report on a particular company if it determines that the fundamentals of such a concern are not permanently impaired. Restructuring Plays, Breakups, and Spin-offs. A company interested in enhancing shareholder value may spin off a portion of its assets to current stockholders through the creation of a new public entity. The common stock of the newly spun-off company may trade temporarily at a substantial discount to its underlying NAV. This is in part because this new entity is not immediately followed by Wall Street analysts. However, the newly focused "pure play" companies often perform well and soon receive more coverage than they ever would have as one ungainly and difficult to analyze conglomerates. |
*Past performance does not guarantee future results. Please contact Jonathan Boyar at jboyar@boyarvalue.com for performance information. |
