UK Value Investor

The owner of Barratts shoes I think. I had a quick look at their valuation as at Feb 08. They had negative liquidation values (using net net or 80/50). Their cash flows had been about -8p per share over the last few years. Not sure how that gave a share price of about 60p in the good times.

I think it can be difficult to learn anything without actually living it. So handily Ennstone, my first purchase of a value stock using not much more than price to book, has fallen over into the abyss. This is good for a number of reasons, although of course not so good for the staff.

The collapse of Ennstone has helped me re-think my approach to value investing and most importantly helped me to clarify to myself what it means to me to invest at all.

Alba sold off their brand name to Argos for 30p a share, which is more or less what I bought them for. Alba had almost zero intangible assets so I'm not expecting the book value to have changed after this sale, so I still haven't sold the company. However perhaps I should have since it reached about 55p soon after the 30p dividend was announced and stayed there-abouts until after the ex-divvy date. This dividend gives me some fresh capital for allocation and French Connection is looking interesting.

Alexon Group is a ladies clothing retailer. They have brands such as Ann Harvey and Bay Trading. The numbers when I bought were:

debt/equity = 1.33
price/book = 0.2
price/tangible book = 0.31
price/net net value = 0.54

So it hits all the criteria I currently use.

Since I started the value investing approach I've been putting about 5% into each company. So far there are 6 companies, all of which have made sizeable losses which ties in with the saying that value investors "buy too early and sell too early". That's my excuse anyway.

As I continue to buy companies at a rate of about 1 a month I should be fully invested in just over a year, assuming that equities remain as cheap as they are now, which seems likely. Then of course the assumption is that as the markets recover to some extent these heavily oversold stocks rebound fast. Once they reach more sensible valuations (say, price/tangible book of 1) then I'll sell in favour of other companies that are still available cheaply.

Alba sell electronic consumer goods. Alba’s UK Consumer Electronics Division incorporates brands, such as Alba, Bush, Goodmans and Grundig. The numbers when I bought were:

debt/equity = 0.34
price/book = 0.2
price/tangible book = 0.2
price/net current asset value = 0.31

So by all accounts it's pretty cheap. Let's see if the management either burn all the cash and justify the current valuation or they turn a profit and so do I.

A few posts ago I said:

"Unless there is a economic crisis or extreme interest rate rise I don't see how this is going to happen in just a few years (not even the 7 years of the last downturn). It seems more likely to me that we'll have a property downturn for a decade or more finally resulting in fair value, before we start the march up again. "

I think we've just been through a bit of a banking crisis so perhaps lending criteria will dry/stiffen up sufficiently to sustain about 15% a year nominal drops, which gives us a 50% drop in only 3 years. I still think that's unlikely but with inflation near 5% the drops in real terms could be of that order.

Northamber Plc is a United Kingdom-based company principally engaged in the supply of computer hardware, computer printers and peripheral products, computer telephony products and other electronic transmission equipment.

Price/book = 0.34
price/tangible book = 0.34
price/(current assets - all liabilities) = 0.39

In the last few years it's been making a small profit and paying a dividend. Price has ranged between 117p and the current lows around 30p.

Lets see what the next few years bring.