cdco.ob

**vin** Thu Feb 24, 2005 12:52 pm

cdco.ob
why buffet buy Comdisco Holding, a companyselling it's asset ? It has cash per share $35.98, book value/per share $.27 and last year earning of 4 eps. no debt. It is NCAV value is $20. but they make money by saling assets, and they sold 90+% of asset, so is this an under value stock. what happened if it sold out all it asset.? How much equalty holder get?

**blast_investor** Thu Feb 24, 2005 1:01 pm

This is old holding of Buffet.

It was liquidating arbitrage play. The company returned cash to shareholders. If shareholders purchased stock below that liquidation value, shareholders make money. The idea is to profit from the difference of value and price.

I believe that was the strategy Buffet used in this stock a while ago.
Buffet may also purchased convertable bonds and then converted into common stocks here.

**vin** Thu Feb 24, 2005 1:16 pm

so how to get liquidation value?
is it same as book value?

**blast_investor** Thu Feb 24, 2005 2:13 pm

Re: so how to get liquidation value?
No, liquidation value most time is smaller than book value.

Sometimes it is larger than book value.

The appraisal is based on analyst's experience and industry knowledge.
Benjamin Graham security analysis method discussed in his book can be used to do that.

vin wrote: is it same as book value?

**wonton** Thu Feb 24, 2005 2:50 pm

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**blast_investor** Thu Feb 24, 2005 8:28 pm

Buffet has been doing this kind of arbitrage strategy for many decades. He learned this from his teacher Ben Graham originally according to book "Buffetology".

Mr. Graham has a mathematical modeling on this. The book "Buffetology" said Mr. Buffet followed his teacher's formula to do this.