I believe that once we identify a wonderful business (simple, leadershiip position in a stable industry, demonstrable growth runway, high returns on capital, operating leverage, unusually high returns
on net tangible assets (secret sauce), abundant FCF, conservative balance sheet, and a shareholder friendly management with a good capital allocation track record), we need to hold on to it, CHD is a perfect example.
«An offshore player would have to pay around three
times net tangible assets to acquire and back itself to pull out some significant costs to make the deal work.
For example, in cases where the Security and Exchange Commission suspended trading in microcap stocks, the average company had only six million dollars
in net tangible assets.
They include: «durable competitive strengths; able and high - grade management; good returns on
the net tangible assets required to operate the business; opportunities for internal growth at attractive returns; and, finally, a sensible purchase price.
In June 2015, gross debt stood at $ 400m (net debt was $ 320m), while the business had less than $ 700m in
net tangible assets.
Most notably, RNY Property Trust's (RNY)
net tangible assets (NTA) deteriorated over the year as its manager, New York based RXR Realty, announced it was liquidating the Trust's portfolio of office buildings (see below).
Trading in the units so far has been orderly and mostly at a small premium to
net tangible assets.
Large cattle station owners such as the Macquarie Group's Paraway Pastoral and the Australian Agricultural Company had the values of their properties drop but they have rebounded and now shares in AACo are trading at a premium to the company's
net tangible assets.
My guess is the scar from the depression was too great for him to overcome, and he could never get comfortable in making investments in good operating businesses where the price exceeded
the net tangible asset value.
One side effect of a «close - end» structure is that the LIC share price can depart from the value of the underlying assets (usually other equities), so the share price can trade at a premium or discount to
its Net Tangible Assets.
Bought at less than
Net Tangible Assets I would still find it an attractive consideration.
The balance sheet explicitly says:
Net tangible Assets (i.e. surplus of...
around 50 % required additional detailed assessment to determine whether they adequately complied with
their net tangible assets requirements, and
LICs and LITs usually trade at either a discount or premium to
their net tangible asset backing.
Importantly, the company has
net tangible assets of $ 63m and $ 20m worth of franking credits.
Listed funds must comply with ASX Listing Rules, and must disclose information on
their net tangible asset backing along with any pertinent information relating to the entity in a timely manner.
This performance is reflected in Argo's current market capitalisation, which trades at a 34 % discount to the company's net cash and investments (and a 45 % discount to
net tangible assets), while clearly there is no public market recognition of the underlying value of the asset management business.
Here's how a scheme's
net tangible assets (NTA) is calculated.
The rest of the time I want to own a basket of above average stocks at below average prices, and also a small basket of cheap stocks relative to
net tangible assets.
(Basically the value of
its net tangible assets.)