The purpose of this blog is to track 20 common stocks for a full year. The idea is to beat the S & P 500 like a mutual fund without the very high churn rate. These stocks will be held in a portfolio until next December 31.

Saturday, January 7, 2012

Kahn Brothers

http://www.kahnbrothers.com/

Yesterday CrossingWallSteet linked an interview with Irving Kahn, a 106 year old founder of the Kahn Brothers.  On web site it states.

"NET WORKING CAPITAL DISCOUNTS are stocks selling below net working capital per share after subtracting all long-term liabilities. In other words, if you subtract all current liabilities from all current assets, then further subtract all long-term liabilities and, finally, divide the remaining figure by the number of shares outstanding, you derive the net working capital per share. If a stock sells for less than this figure, you have an attractive price that always warrants a thorough investigation."

So I ran this formula on our buy-list.



Date 1/7/12



Ticker Price Outstanding Shares(m) Current Assets (TH) Total Liabilities(TH) Net Working Cap/S
AFL $44.24 466.790 $2,782,000.00 $89,983,000.00 -$186.81
BDX $73.03 214.890 $4,668,331.00 $5,602,253.00 -$4.35
BBBY $59.94 241.250 $4,073,838.00 $1,714,534.00 $9.78
DF $10.56 187.700 $181,612.00 $6,457,142.00 -$33.43
F $11.71 3,800.000 $48,875,000.00 $165,360,000.00 -$30.65
GE $18.65 10,560.000 $161,994,000.00 $751,216,000.00 -$55.80
HCP $40.34 407.790 $3,110,390.00 $5,374,556.00 -$5.55
INTC $25.25 5,090.000 $31,611,000.00 $13,756,000.00 $3.51
ITW $47.79 483.190 $5,968,401.00 $6,869,027.00 -$1.86
KKR $13.40 223.280 $38,081,403.00 $37,064,664.00 $4.55
KO $68.93 2,270.000 $21,579,000.00 $41,918,000.00 -$8.96
LUK $23.89 244.580 $985,590.00 $2,393,540.00 -$5.76
MKC $50.38 132.280 $1,015,900.00 $1,966,000.00 -$7.18
MO $28.72 2,060.000 $5,981,000.00 $32,178,000.00 -$12.72
NICK $12.85 11.960 $232,182.00 $128,430.00 $8.67
ORCL $26.93 5,030.000 $39,174,000.00 $33,290,000.00 $1.17
PG $66.36 2,750.000 $21,970,000.00 $70,714,000.00 -$17.73
RAVN $66.36 18.100 $128,181.00 $46,546.00 $4.51
RLI $73.64 21.080 $501,341.00 $1,723,216.00 -$57.96
SYK $51.50 382.670 $7,631,400.00 $3,721,500.00 $10.22








NICK is by far the winner of this race. This is a very difficult measure to hurdle.   The idea is that the company has very few long term assets such as plant/building and goodwill, but more working capital per share than the price of the stock.