What's Value Investing?
Value investing is the art of buying stocks that trade at a significant discount to their intrinsic value or book value with the intention of holding the stock until the value is unlocked or the market becomes more efficient and correctly prices the stock
Value investing is the art of buying stocks that trade at a significant discount to their intrinsic value or book value with the intention of holding the stock until the value is unlocked or the market becomes more efficient and correctly prices the stock
What's a Value Stock?
A value stock is a stock with a price that appears low relative to the company's financial performance, as measured by such fundamentals as the company's assets, revenue, dividends, earnings, and cash flows.
A value stock is a stock with a price that appears low relative to the company's financial performance, as measured by such fundamentals as the company's assets, revenue, dividends, earnings, and cash flows.
Warren Buffett started his career as a deep value investor but he slowly changed from the "cigar-but" strategy to "quality" value investing. as he got more experience and most importantly as his wealth increased i.e. compounded.
"don't risk what you have & need for that which you don't have and don't need" this could be why Buffet stopped buying risky deep value companies.
Charlie Munger my hero said "all intelligent investing is value investing" and played a key role in helping Buffett make the switch.
Charlie Munger my hero said "all intelligent investing is value investing" and played a key role in helping Buffett make the switch.
Value investors are actively looking for value stocks, they say they look for assets that are worth $1 and can be bought for an amount significantly less than $1 like $0.8 or 0.4 or 0.1.
Value investors achieve this by looking for companies on cheap valuation metrics, typically low multiples of their profits or assets, for reasons which are not justified over the longer term.
This approach requires a contrarian mindset and a long-term investment horizon.
This approach requires a contrarian mindset and a long-term investment horizon.
In value investing the management plays a very important role as most time a stock always underperforms for very good and obvious reasons, KPLC. Is the management team at the top capable of turning around the business (Because stocks are business)
To calculate intrinsic value and determine good buys, value investors analyze the fundamentals of a company’s performance—things like earnings, revenue, cash flow and price-to-earnings ratios, along with a host of other financial information
Ben Graham’s 1949 The Intelligent Investor defines them as stocks that trade at single-digit price-earnings multiples, trade at a discount to book value, or trade below their cash value. Placing a great emphasis on statistical cheapness.
gurufocus.com
gurufocus.com
So is KPLC a value stock, yes it is
If you do the basic valuation of the company's assets, revenue, dividends, earnings and cash flows. Then add a discount to factor in the rampant corruption, inventory theft and illegal connection. I am sure the company will not be worth Ksh 0/=
If you do the basic valuation of the company's assets, revenue, dividends, earnings and cash flows. Then add a discount to factor in the rampant corruption, inventory theft and illegal connection. I am sure the company will not be worth Ksh 0/=
It is a monopoly player and this space is tightly regulated by the Government, it is producing a very important product for everyone here, we all everyone consume their services and they can easily raise their prices to deal with inflation.
The only challenge is management, in most cases that can easily be changed but KPLC has bad management practices rooted deep within its culture that anyone who comes in to fix this reputation leaves with a tarnished reputation and the company's reputation remains intact.
So is KPLC a value trap, yes it is
Value trap is an investment that appears to be cheaply priced because it has been trading below its intrinsic value & valuation metrics, such as price to earnings (P/E), price to cash flow (P/CF), or price to book value (P/B) for a long period
Value trap is an investment that appears to be cheaply priced because it has been trading below its intrinsic value & valuation metrics, such as price to earnings (P/E), price to cash flow (P/CF), or price to book value (P/B) for a long period
A value trap can attract value investors who are looking for bargains in the stock market because they seem statistically inexpensive relative to historical valuation multiples of the stock or relative to those of industry peers or the prevailing market multiple.
The danger of a value trap presents itself when the stock continues to languish or drop further after an investor buys into the company.
Here is a good article on value traps
wallstreetmojo.com
Here is a good article on value traps
wallstreetmojo.com
So is this a value stock & value trap because it is cheap and I still see no end in the current issues facing the company.
I will not invest now because of the bad management, high corruption level, theft and all the bad vibes associated with the name KPLC
I will not invest now because of the bad management, high corruption level, theft and all the bad vibes associated with the name KPLC
But if it traded even closer to zero, then yeah, I will probably put in my money and be vocal on a turnaround strategy (though these sides you can be killed for such things) I will probably just put the money and wait 😅
Investing is a very personal journey and it is coloured by our own experiences, risk tolerance & the amount of money invested.
if it is not your money you should not be too concerned about what others are investing in.
Remember Be Humble & Kind because maybe you might be wrong.
if it is not your money you should not be too concerned about what others are investing in.
Remember Be Humble & Kind because maybe you might be wrong.
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