Professor Glen Arnold

I continue the series of great investor aphorisms with guidance on awareness of crowd lunacy. If forty Wall Street analysts are giving the stock their highest recommendation, 60 percent of the shares are held by institutions, and three national magazines have fawned over the CEO, then it’s definitely to think about selling. Peter Lynch What […]

I had intended to write one Newsletter setting out aphorisms spoken by great investors to help fortify us in the difficult days ahead.  But I came across so many wonderful pieces of advice that I decided to allocate them to seven different categories (seven Newsletters): What happens in the run up of a boom? Beware […]

Caledonian Trust’s shares (LSE:CNN) have risen by 157% since I bought in 2013 – and, still they are not trading at my conservative estimate of net current asset value, NCAV. Today I’ll show both the official balance sheet and my estimate of its property assets. The official balance sheet £000s Investment property 12,080 Trading property […]

I first bought into Caledonian Trust (LSE:CNN), a Scottish property developer, in July 2013 at 70p after valuing the company at much more than its market capitalisation (£7.7m).  My reasoning focused on the fact that the balance sheet failed to reflect the true market value of its properties.  This was because most of the building sites […]

EBITDA is classified by some commentators as a cash flow measure of value. EBITDA (pronounced e-bit-dah} means earnings before (deduction of) interest, taxation, depreciation and amortisation. Many financiers and press reporters use EBITDA in a ratio with enterprise value, EV (market value of equity + market value of debt – cash in the business). It […]

Before I post analyses of Caledonian Trust, J Smart and Co, Haynes and Arden Partners I thought I’d finish off the series of newsletters on the principles of share valuation.  Today, how value can be different if managerial control is achieved through a merger. Tomorrow, the problems with using EBITDA as a valuation tool. Different […]

Mr Market thinks Connect (LSE:CNCT) will be forced to cut its dividend from its current 9.8p (13% yield) because its businesses are in long-term decline. Today I will examine those businesses in light of the information we have been given in the recent annual report, last week’s profit warning and the AGM. Five potential problems: […]

Connect Group (LSE:CNCT) offers a 13% dividend yield.  What might cause the dividend to cease or be lowered? I’ll discuss some possibilities. Summary of the businesses The Smiths News part of the company focuses on distribution of newspapers and magazines on early morning routes to 27,000 newsagents.  It has a 55% market share nationwide, but within particular […]

I bought into Connect Group (LSE:CNCT) in September at 104.6p.  A couple of months later it declared good results for the year and a 6.7p final dividend.  The shares rose to 120p, so it was looking like I’d made a return of 21% in three months. Then BANG! On Tuesday the share prices collapses to […]

Some analysts use the historic PER (current price divided by most recent annual earnings), to make comparisons between firms without making explicit the considerations hidden in the analysis. They have a view of an appropriate PER based on current prevailing PERs for other firms in the same industry. So, for example, Barclays with a PER […]