Sterling Return Using Liquidation Value

I mentioned Monday I was putting together a list of companies that traded near or below my estimated liquidation value and, as expected, I got several e-mails asking the same question. Everyone wanted to know how to derive a valid estimate of this value.

In the interests of both not giving away the farm and also teaching a man to fish, I will tell you that the formula I used is a variation of the ones outlined in "Security Analysis" by Ben Graham and "Margin of Safety" by Seth Klarman. You need to read both of these books to practice asset-based value investing anyway, so you may as well get started. Martin Whitman's "Aggressive Conservative Investor" will also assist you in calculating an appropriate liquidating value....621 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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