One of my favorite pieces of investing from Michael Price

Michael Price is a legendary investor and someone I try to learn from whenever I get the chance. I mean, this is one the guys that taught Seth Klarman how to invest capital. A few years ago, Michael Price gave a speech to Bruce Greenwald’s Value Investing course at Columbia Business School. While I do not have the transcript directly in front of me, his words can be summarized as follows: “Read proxies and bankruptcy disclosure statements because they tell you what rational buyers are paying for businesses.”

Now this is not theoretical data – i.e. this stock should trade at 6x or 9x – this is a real buyer, with real capital at risk, deploying that capital to buy a certain asset or company. And that information holds value and is very rarely discussed or even analyzed by the sell side.

For those that are interested on Bloomberg, you can make a macro to type in NSE “PREM14 A”, and assign that macro to a button and have all the proxies filed at the tip on your hand. For disclosure statements, the process gets a little trickier – you have to monitor the docket to determine when the disclosure statement actually gets filed.

http://www.distressed-debt-investing.com

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2 thoughts on “One of my favorite pieces of investing from Michael Price

  1. Andrew Schneck

    Greg,

    Nice commentary- I’d agree with Michael Price on this one with the proxies. I go through a company’s proxy before I even look at the annual report; it gives a better picture of management, compensation, corporate governance, and the history of the firm. Haven’t heard anyone mention bankruptcy disclosure documents before, thanks for the tip

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  2. Ambrose T

    I listened to the class video a few years back, here are some notes:

    Wall Street rips people off on new instruments – don’t get distracted
    Don’t spend too much time on complex securities like CLO’s
    Small/mid-caps should be cheaper than large-caps usually
    Comcast / Time Warner – not moved for 5-6 years
    GE – 40x earnings, Jack Welch on covers, books in 2000/2001
    Johnson & Johnson – at low range of historical PE ranges of last 20 years!
    Special Situations – Classes of stocks, change of generations, etc.
    Compute intrinsic value according to what smart ppl pay – read proxies, chap 11 statements,etc.
    Getting creative with information sources
    FT’s Lex Column – good idea bed?
    Restatements of financials , uncertainty
    More opportunities-driven approach with signs and news than concentrated

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