One of my rules of thumb in equity investing is that if I buy companies trading below tangible book value, with earnings yields over 10%, it is difficult to lose value, and the odds favor gaining value.
But there are some caveats:
- Analyze the balance sheet, highly indebted companies are not to be trusted, but that varies by industry.
- Longer dated assets, like property, plant & equipment should be discounted.
- Banks and REITs must be scrutinized carefully, because of their weak liability structures.
- Foreign companies need extra scrutiny, because the disclosures are often not as good. This goes triple for Chinese companies.
- Make sure you are not investing in a “buggy whip” industry, particularly in the era of the internet. How can your company be disrupted?
The idea is a simple one. Buy companies below their tangible book value when they have good earnings, and good earnings prospects. Over a long enough period of time, the growth in tangible book value will help drive growth in the stock price.
For companies with over $100 million in market capitalization, here are the companies that fit this description:
| Company | Ticker | Img_desc | Country | Exchg_desc | P/TB | P/E | Expected P/E | Mkt cap | LT Debt/ Equity |
| AerCap Holdings N.V. | AER | 0939 – Rental & Leasing | Netherlands | N – New York | 0.66 | 7.6 | 5.2 | 1524.4 | 263.6 |
| Aircastle Limited | AYR | 0939 – Rental & Leasing | United States | N – New York | 0.64 | 8.4 | 8.1 | 931.2 | 202.1 |
| American International Group, | AIG | 0715 – Insurance (Property & Casualty) | United States | N – New York | 0.55 | 2.9 | 9.8 | 56637 | 73.6 |
| Anworth Mortgage Asset Corpora | ANH | 0933 – Real Estate Operations | United States | N – New York | 0.94 | 7.8 | 7.9 | 917.8 | 3.8 |
| Assurant, Inc. | AIZ | 0709 – Insurance (Life) | United States | N – New York | 0.74 | 5.7 | 6 | 2992.7 | 19.6 |
| AXA (ADR) | AXAHY.PK | 0709 – Insurance (Life) | France | O – Over the counter | 0.88 | 7.6 | 5.8 | 29204.3 | 21.5 |
| Axis Capital Holdings Limited | AXS | 0715 – Insurance (Property & Casualty) | Bermuda | N – New York | 0.86 | 8.3 | 8.8 | 4325.9 | 19.3 |
| AXT, Inc. | AXTI | 1033 – Semiconductors | United States | M – Nasdaq | 0.94 | 7.5 | 9.9 | 129 | 2.8 |
| Banco Bilbao Vizcaya Argentari | BBVA | 0724 – Money Center Banks | Spain | N – New York | 0.9 | 8.7 | 6 | 34554.8 | 250.4 |
| Barclays PLC (ADR) | BCS | 0727 – Regional Banks | United Kingdom | N – New York | 0.42 | 6.9 | 3.6 | 31291.9 | 44.7 |
| Callon Petroleum Company | CPE | 0609 – Oil & Gas Operations | United States | N – New York | 0.86 | 1.7 | 5.8 | 171.6 | 62.6 |
| Chimera Investment Corporation | CIM | 0703 – Consumer Financial Services | United States | N – New York | 0.73 | 4.6 | 5.3 | 2434.6 | 59.2 |
| China Gerui Adv Mtals Grp Ltd | CHOP | 0121 – Iron & Steel | China | M – Nasdaq | 0.55 | 2.3 | 1.7 | 157.4 | 0 |
| China Zenix Auto International | ZX | 0415 – Auto & Truck Parts | China | N – New York | 0.49 | 1.8 | 1.4 | 127.3 | 0 |
| Citigroup Inc. | C | 0724 – Money Center Banks | United States | N – New York | 0.53 | 7.4 | 5.8 | 77291.7 | 165.3 |
| Corning Incorporated | GLW | 1024 – Electronic Instruments & Controls | United States | N – New York | 0.95 | 8 | 8.4 | 19410 | 14.7 |
| Crexus Investment Corp | CXS | 0933 – Real Estate Operations | United States | N – New York | 0.85 | 6.6 | 9.4 | 779.2 | 0 |
| Deutsche Bank AG (USA) | DB | 0727 – Regional Banks | Germany | N – New York | 0.65 | 7.6 | 4.7 | 31543.1 | 318.7 |
| GeoEye Inc. | GEOY | 0909 – Business Services | United States | M – Nasdaq | 0.8 | 7.3 | 8.7 | 358.5 | 97.6 |
| Hardinge Inc. | HDNG | 0218 – Misc. Capital Goods | United States | M – Nasdaq | 0.74 | 8 | 7.4 | 105.1 | 4.3 |
| Homex Development Corp. (ADR) | HXM | 0215 – Construction Services | Mexico | N – New York | 0.91 | 8.6 | 5.5 | 846.4 | 85.4 |
| Ingles Markets, Incorporated | IMKTA | 0957 – Retail (Grocery) | United States | M – Nasdaq | 0.91 | 9.9 | 8.2 | 400 | 183.1 |
| Ingram Micro Inc. | IM | 1006 – Computer Hardware | United States | N – New York | 0.77 | 9.6 | 7.6 | 2591.2 | 8.7 |
| Jinpan International Limited | JST | 1024 – Electronic Instruments & Controls | China | M – Nasdaq | 0.85 | 5.3 | 4.7 | 132 | 0.8 |
| Kelly Services, Inc. | KELYA | 0909 – Business Services | United States | M – Nasdaq | 0.77 | 6.4 | 7.4 | 462.9 | 0 |
| KeyCorp | KEY | 0727 – Regional Banks | United States | N – New York | 0.83 | 8.4 | 9.5 | 7339.2 | 90.7 |
| KKR Financial Holdings LLC | KFN | 0718 – Investment Services | United States | N – New York | 0.89 | 5.1 | 4.7 | 1557.4 | 0 |
| Knightsbridge Tankers Limited | VLCCF | 1118 – Water Transportation | Bermuda | M – Nasdaq | 0.61 | 6.9 | 9.4 | 215.2 | 42 |
| KT Corporation (ADR) | KT | 0915 – Communications Services | South Korea | N – New York | 0.89 | 9 | 7 | 7041.3 | 72.6 |
| Le Gaga Holdings Ltd ADR | GAGA | 0509 – Crops | Hong Kong | M – Nasdaq | 0.89 | 8.1 | 4.1 | 200.3 | 5.3 |
| Lihua International Inc | LIWA | 0127 – Misc. Fabricated Products | China | M – Nasdaq | 0.7 | 3.1 | 2.1 | 161.3 | 0 |
| LUKOIL (ADR) | LUKOY.PK | 0606 – Oil & Gas – Integrated | Russia | O – Over the counter | 0.68 | 4.2 | 4 | 47753.8 | 10.4 |
| Mechel OAO (ADR) | MTL | 0124 – Metal Mining | Russia | N – New York | 0.8 | 4.6 | 3.5 | 3322.6 | 139.6 |
| Metlife Inc | MET | 0709 – Insurance (Life) | United States | N – New York | 0.69 | 5.7 | 5.4 | 32402.5 | 45.3 |
| Mizuho Financial Group Inc. (A | MFG | 0727 – Regional Banks | Japan | N – New York | 0.9 | 3.5 | 8.5 | 40165.5 | 236.3 |
| Navios Maritime Holdings Inc. | NM | 1118 – Water Transportation | Greece | N – New York | 0.53 | 4.6 | 7.6 | 350.3 | 131.3 |
| Newfield Exploration Co. | NFX | 0609 – Oil & Gas Operations | United States | N – New York | 0.98 | 5.9 | 8.8 | 3943.1 | 72.2 |
| Olympic Steel, Inc. | ZEUS | 0127 – Misc. Fabricated Products | United States | M – Nasdaq | 0.86 | 8.8 | 6.4 | 181.8 | 95.4 |
| Orbotech Ltd. | ORBK | 1033 – Semiconductors | Israel | M – Nasdaq | 0.78 | 6.3 | 9.7 | 329.7 | 13.1 |
| Patterson-UTI Energy, Inc. | PTEN | 0612 – Oil Well Services & Equipment | United States | M – Nasdaq | 0.93 | 6.6 | 8.3 | 2276.5 | 18.7 |
| Petroleo Brasileiro SA (ADR) | PBR | 0606 – Oil & Gas – Integrated | Brazil | N – New York | 0.9 | 6.8 | 6.3 | 126006.1 | 43.5 |
| Phoenix Companies, Inc., The | PNX | 0709 – Insurance (Life) | United States | N – New York | 0.21 | 3.6 | 3.7 | 203.5 | 45 |
| Popular, Inc. | BPOP | 0727 – Regional Banks | Puerto Rico | M – Nasdaq | 0.52 | 8.9 | 6.1 | 1664 | 47.1 |
| Protective Life Corp. | PL | 0709 – Insurance (Life) | United States | N – New York | 0.7 | 7.2 | 8 | 2557 | 53 |
| Reinsurance Group of America I | RGA | 0706 – Insurance (Accident & Health) | United States | N – New York | 0.68 | 7.8 | 7.2 | 4059.3 | 34.9 |
| Republic Bancorp, Inc. KY | RBCAA | 0727 – Regional Banks | United States | M – Nasdaq | 0.94 | 4.7 | 8.7 | 489.6 | 7.7 |
| REX American Resources Corp | REX | 0103 – Chemical Manufacturing | United States | N – New York | 0.65 | 7.8 | 6.8 | 163.9 | 41 |
| Royal Caribbean Cruises Ltd. | RCL | 1118 – Water Transportation | United States | N – New York | 0.71 | 9.7 | 9.5 | 5542.1 | 91.9 |
| Societe Generale SA (ADR) | SCGLY.PK | 0724 – Money Center Banks | France | O – Over the counter | 0.29 | 5.8 | 3.8 | 16945.2 | 20.7 |
| StanCorp Financial Group, Inc. | SFG | 0706 – Insurance (Accident & Health) | United States | N – New York | 0.84 | 2.5 | 8.7 | 1676.1 | 14.8 |
| StealthGas Inc. | GASS | 1118 – Water Transportation | Greece | M – Nasdaq | 0.38 | 8.5 | 5 | 122.1 | 98.5 |
| Symetra Financial Corporation | SYA | 0709 – Insurance (Life) | United States | N – New York | 0.47 | 7.8 | 8.5 | 1494.6 | 0 |
| Tech Data Corp | TECD | 1006 – Computer Hardware | United States | M – Nasdaq | 0.96 | 9.8 | 8 | 1918.9 | 2.9 |
| Ternium S.A. (ADR) | TX | 0121 – Iron & Steel | Luxembourg | N – New York | 0.81 | 8.3 | 5.8 | 3993.4 | 26.2 |
| Thompson Creek Metals Company, | TC | 0124 – Metal Mining | United States | N – New York | 0.33 | 3.5 | 5.7 | 563.9 | 20.8 |
| Transportadora de Gas del Sur | TGS | 0609 – Oil & Gas Operations | Argentina | N – New York | 0.43 | 5.6 | 7.5 | 191.7 | 80.6 |
| TravelCenters of America LLC | TA | 0963 – Retail (Specialty Non-Apparel) | United States | A – American | 0.51 | 4 | 3.7 | 145 | 31.9 |
| Triple-S Management Corp. | [[GTS] | 0806 – Healthcare Facilities | Puerto Rico | N – New York | 0.76 | 9.4 | 8.6 | 510.6 | 18.2 |
| Unit Corporation | UNT | 0612 – Oil Well Services & Equipment | United States | N – New York | 0.94 | 8.7 | 9 | 1819.7 | 15.8 |
| Valero Energy Corporation | VLO | 0609 – Oil & Gas Operations | United States | N – New York | 0.86 | 9.1 | 5.6 | 13578.5 | 40.5 |
| Vishay Intertechnology | VSH | 1033 – Semiconductors | United States | N – New York | 0.97 | 7.7 | 7.1 | 1433.8 | 23.4 |
| Woori Finance Holdings Co., Lt | WF | 0727 – Regional Banks | South Korea | N – New York | 0.57 | 4.5 | 4.8 | 8482.1 | 0 |
| Xinyuan Real Estate Co., Ltd. | XIN | 0215 – Construction Services | China | N – New York | 0.33 | 2 | 2.1 | 215.1 | 8.8 |
| Yongye International Inc | YONG | 0103 – Chemical Manufacturing | China | M – Nasdaq | 0.55 | 1.9 | 1.3 | 163.7 | 2.8 |
| ZHONGPIN INC. | HOGS | 0515 – Food Processing | China | M – Nasdaq | 0.89 | 6.6 | 5.5 | 371.9 | 18.1 |
| Zuoan Fashion Ltd (ADR) | ZA | 0403 – Apparel/Accessories | China | N – New York | 0.6 | 2.4 | 1.8 | 102.1 | 0 |
Full disclosure: long AIZ, PBR, RGA, SFG, VLO
Also, be wary of Chinese companies, I mean it.
