What Happened To My Margin Of Safety?

[indythinker85]

When describing how we manage money, we value investors often use terms that slide effortlessly off the tongue. This article is a real life chronology of an investment which the author believed had a ‘margin of safety' embedded in his purchase price. The investment journey turned out to be far more complicated than envisaged. Luckily we can all learn a little from his experience.

 

http://www.valueinstitute.org/viewarticle.asp?idIssue=1&idStory=120

[oddballstocks]

Great read, hits on a few things a lot of investors in liquidation/net-nets miss, operating leases, losses, pensions etc.  Liabilities are important. 

 

The other thing that caught my eye was at the point of maximum pain if he would have averaged down he would have done well in the end.  The issue is it's incredibly hard if not impossible to see the ice cube melting away and commit more capital as the share price falls off a cliff. 

 

I love reading stories like that, thanks for posting.

[writser]

yep, great article.

[Hielko]

Great article

 

I did not know that the cost involved in mothballing some of their quarrier was higher than the cost of keeping them open due to contracts they signed that included minimum royalty payments to faarmers from whom they bought the land.

I would expect that he could have figured this out from the annual report? Must be a footnote somewhere.