The analysis and valuation series on Dole, Chiquita, Fresh Del Monte, and my conclusions, which is the finale in the series that just got published, is exactly how I am planning on going about my analysis in the future. I am light years ahead of where I was when I first started, but I am still light years from where I need to be. The main thing I need to keep working on is my ability to judge competitive advantages.
I am now going to be finishing up Competition Demystified, which will help me judge competitive advantages better, and I will be searching for my next company to study.
Here’s Taseko Mines, (TGB) valuation and my mistakes:
Taseko Mines, (TGB) is a mining company with operations in Canada. Their only currently operating mine is Gibraltar, a copper and molybdenum mine, that they own 75% of in a joint venture with another company. They also own the New Prosperity, Aley, and Harmony mines that are in various stages of exploration.
The following valuations are only considering the Gibraltar mine since it is currently the only operating mine.
First ever valuation done. Done on 2-26-2012, using trailing twelve month numbers from December 2010-September 2011. All numbers in Canadian dollars unless otherwise noted, except per share numbers.
I also recently realized I forgot to convert the numbers to US dollars. Luckily US dollars and Canadian dollars are pretty equivalent in their prices, so it did not effect the valuations too much and I will leave the numbers as I did them in my valuation.
Cash and Cash equivalents of 257.3 + short term investments of 114
Number of shares are 195.4
Current liabilities of 56.2
Cash and cash equivalents of 257.3+short term investments of 114-current liabilities=315.1
315/1/195.4=$1.61 in net cash per share
EBIT of 116.4 TTM number.
8X-14X EBIT=931.2-1629.6 in EBIT+257.3 in cash and cash equivalents=a range of 1188.5-1886.9
1188.5/195.4=$6.08 per share.
1886.9/195.4=$9.67 per share.
Current price at that time was $4.20 per share. Market cap was 821.4 million
Enterprise Value=Market cap+debt, minority interest & preferred shared-total cash and cash equivalents-short term investments.
I learned some valuable lessons from this valuation and getting better with subsequent valuations. First, I should have converted the numbers that were in Canadian dollars to US dollars. Second and more importantly I should have used as my lowest multiple 5X instead of 8X for a more conservative estimate of their value. I also should have added the short term investments into the cash and cash equivalents number to get a more realistic number to multiply by, getting me closer to the intrinsic value. That would have gotten me to: 5X 116.4+cash and cash equivalents and short term investment=897 as my low number. Dividing 897/195.4 you get $4.59 per share, only slightly above the then share price.
On a more recent asset valuation doing things properly, I got a price per share of $3.70 per share.
This was a stock I bought before doing the amount of research I am doing now, and with doing no valuations. I bought my set of shares in TGB without reading any 10K’s or 10Q’s, and only reading about the potential value that they hold in their mines in the minerals of copper, gold, molybdenum, and niobium.
I am currently paying the price for my previous “investing” transgressions with a current -45% loss on this stock. Originally bought shares at $5.98 per share with a total cost basis currently of $4.77 per share current share price is $2.80 per share, OUCH!
Holding onto my current shares in the hopes, (otherwise known as speculating, or gambling, which is not a good thing to do in the stock market), that the New Prosperity gold and copper mine gets approved in November, and jumps the stock up to a price where I can sell at a minor loss or profit and move on to something that has a bigger margin of safety.
Over the next couple days I will be posting valuations of companies that I have found to be overvalued and summaries of their pros and cons as investments.
In the meantime I have been trying to do some catching up on csinvesting.wordpress.com. I came to the blog a few months after it started and have been playing catch up ever since.
I have also just finished Fiskars most recent 10K and 10Q, and plan to read a lot more on them and eventually do a valuation. So far the main problem I am finding with them is that they do not list their shares in the US, and buying their shares would cost me a $75 commission fee instead of the normal $6.95 per transaction. Fiskars is a Finnish company who makes high quality home, garden, and outdoor products and I will post more about them if and when I do a valuation of them with further research.
Eventually I would love to become a learning resource for people who are visiting here, but for now csinvesting.wordpress.com, oldschoolvalue.com, and greenbackd.com are infinitely better resources at this point, and probably for the foreseeable future since they seem to far ahead of me in their investing journeys, and I would point those of you who are trying to learn the ins and out of investing to those sites.