In November 2008, published a commentary on the assessment of criteria, post I have made several updates about the comment.
As UDS remember and if not what can be found in the commentary I showed various arguments to try to demonstrate that market was not recognizing the intrinsic value of the company. At that time trading in the vicinity of 2.5, I believe the time has highlighted that fact that an entry at that time reported an excellent performance as well as a capital gain of approximately 80% have earned several annual dividend about 8% annual effective, I think it is far more and valuation analysis and risk management therefore worthwhile.
But not today have to talk about the past but the present moment. CRITERIA In the past few days has been trading between a range between 5.1 and 5.7 euros. Curious I start to hear and read by some analysts that there is value and you have to be, I wonder what reason they had to indicate otherwise when it traded at 2.5 Euros. The question is whether the time is right to be in criterion, that is, as raised in the title, whether the current price holds value.
I think the answer, if you re-read the comment above and any subsequent updates, is clear but in any case it seems appropriate to share the following considerations-reflections:
• criterion has not changed substantially in its investment portfolio and today most of its portfolio is the same as in October 2008, this is: TELEFONICA, REPSOL, GAS NATURAL and ABERTIS.
• Listed companies which make up its portfolio, although in most cases have appreciated, they have done a lesser extent than CRITERIA. In general have risen at around 20% and in the case of GAS NATURAL has not happened this revaluation.
• So why has appreciated CRITERIA?.
• The only significant event was the announcement transformation in which the CAIXA BANCO have 80% of the capital at least in principle this seems the idea.
• I believe that both UDS and I think the CAIXA gives nothing and therefore will not benefit the shareholders of criteria in the ratings for processing BANK. Some will
may think it is this transformation in the Bank to justify the rise in value and I say that then reflect on the price of other banks and to ask, how can it be that the reason while the other the English banking trading at prices that do. Think well and matched
behind the rise there is nothing more than normal that the market is not necessarily efficient in the short term and long term usually tends to pick up the fundamentals of listed companies, which in this case occurs at the time of the announcement it is certain and possible value to be given to investment, but the truth is that investment and the value already. As I am sure I still know the proper risk management requires not make investment decisions when they have a sufficient margin between the intrinsic value of the business and the price that the market recognizes.
If further analysis of valuation at the time made and add the above considerations I think we can conclude:
1) Today the company no longer provides a sufficient margin to be in it for granted that the level of margin required is a personal assessment but I limit myself to analyze it from my point of view. This does not mean you can not see the company trading above where it does now and even above the 5.7 that I play a few days ago.
2) We must carefully assess the new situation after the bank is formalized and have more information. Meanwhile I think it's better to stay out unless the price flex again clearly.
As more than once I have indicated the investment decisions are individual and should be taken after a last analysis, this company I believe it can serve as a clear example of how not to make too much attention to those who insist that the price always correctly reflects the value that encloses the business and only serious study and make us calm may decrease the risk assumed in the medium and long term, providing reasonable returns.
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