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Ancestry.com Inc. Message Board

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  • roseysenario roseysenario Oct 27, 2011 8:40 AM Flag

    My analysis of ACOM

    good that you did not claim allegiance to ben graham this time. the stock is down 35% and falling since your 9/9 table pounding. don't think it would have qualified graham's margin of safety. you need > than a 50% bump just to break even.

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    • The Ben Graham stock price formula still produces a price much higher than the current stock price. The current price implies a future growth rate of about 5%. If you think that Ancestry.com will grow at 5% or less, it's a sell. If you think it will grow something between 5% and 30%, it is under-priced. IBM, which is growing 6% per year (1/45of ACOM's rate, computed using the same method) is selling for a PE of 14. The question becomes, is ACOM going to grow faster than IBM when deciding whether to buy one or the other?

      The Ben Graham Safety Factor is very closely tied to physical and financial assets. I don't think it's as applicable as when The Intelligent Investor was published, particularly for companies like ACOM. In a knowledge-based company, the majority of a company's assets are not even on the books. How much are those genealogical records worth?

      Questions, comments and derogatory remarks are always welcome.

      Jag

      • 1 Reply to jagad5
      • >>>>>The Ben Graham Safety Factor.........I don't think it's as applicable as when The Intelligent Investor was published<<<<

        so you get to pick and chose what parts of BG is apaplicable today? don't call it Ben Graham then. Buffett said on cnbc last year it hasn't changed "1/10th of a degree." where to you see in BG that a stock selling at 14PE with no div has no downside if it grows at 5%? a 3/1 PEG for a slow growth non div paying small cap.

        you are making it up as you go along. best hope for this slowing company is a buyout, usually not a good investment strategy. the stock may soon be a value but with declining confidence is goofy management, stock is likely to continue to flounder.

        by any standard, your early september bull call at $33 was very poor advise, boadering on sheer lunacy.

 

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