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The Hangover
Investment Strategy | 3 Comments | Tue 08 Oct 2013
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Sometimes seemingly sound stocks collapse. On occasion the causes could not have been foreseen, but on others perhaps they should have been anticipated. Arguably the case of UK pawn broker Albemarle & Bond falls into the latter category?



Comments

1.
On 10/10/2013 13:42:41, James East wrote:
Why attempt to even predict cash flows? Just buy cheap assets and the cash flows usually follow in an acceptable manner. This investor with several bruises and scars does not understand the goal of predicting what the value in the future will be instead of concentrating on what the value is today!

2.
On 14/10/2013 14:51:45, Rowan wrote:
Thanks for the comment, James. I can certainly see where you are coming from and I don’t think we are disagreeing with one another, but in effect the value today is ultimately reflective of how other investors should price the expected future cash flows. So for example, if we believe that a stock is undervalued today, we buy it in the hope that tomorrow other investors will revalue the business. This might result in a takeout or simply a rerating, but in each case the new value is usually linked to how these other investors value the cash flow that the business is expected to produce (either in a sale, or as an operating business).

3.
On 28/01/2014 12:05:17, Rowan wrote:
Albemarle & Bond's share price has collapsed again. The company is close to breaching covenantas and the hoped-for sale of the business has not materialised. It looks like the company may be heading for administration. The stock price has fallen from 400p to 8p in a little over 2 years. It never ceases to amaze me how quickly investors can lose money when an investment starts to go really wrong. The padadox is that when times are good it is so difficult to imagine how things can possibly go wrong.

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