One PE stocks | Alpha Quadrant by The Fifth Person

Questions › Category: Investor Psychology › One PE stocks

AD asked 6 months ago

Hi Victor , Rusmin, I recently came across this concept of one PE stocks where the cash available with the company as well as their investments total come to a substantial percentage of the company’s market cap.

is that a consideration in your analysis ? Also should we consider reserves in the balance sheet also as cash in hand , along with cash and investments ?

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Victor Chng Staff answered 6 months ago

Hi AD,

I think you're referring to the net-net stock method that Warren Buffett used in his early days. This method can work, but you need to be clear about your strategy, especially when it comes to selling the stock. This type of investing has a timeline, and if it doesn’t pan out, you need to sell and move on to the next idea. Sometimes, assets may not reach their actual value due to the lack of a catalyst. Hence, having a catalyst is important.