We had a feeling Monday would be bad and boy, did it deliver with the stock market dropping by nearly 8%, now down 19% in just 13 trading sessions. The Oil and Gas Exploration and Production ETF was down 37% today alone! This market selloff is now bigger than what we saw in late 2018, but even more strikingly, it has been virtually a straight ride down. Today was the 20th worst daily trading loss in U.S. stock market history since 1928. I know it can seem really dark going through these times, especially when even outside of finance, we have these concerns about this global pandemic that can have a major impact on our lives.
I thought I’d quickly breakdown a few key valuation points for stocks that we own. It is really easy to see how cheap they are, and how much potential there is to make a ton of money on the recovery. This has happened on many occasions for us, including 2011-2012, 2016, and 2018. While I’d say this market has been worse, it has also been more indiscriminate in what it has sold. These companies are likely to remain profitable even in a minor recession, and they boast the best balance sheets they have had in quite some time. It is ludicrous to think that their intrinsic values have declined anywhere close to as far as their prices have dropped.
1) ALLY Financial.
3/9/20 price $21.06
Adjusted tangible book value per share $35.10
Company earned $3.72 per share last year and is expected to grow eps by double-digits.
2) Citigroup
3/9/20 price $51.37
Earned $8.04 per share in 2019
Tangible book value per share $70.39
3) AGO
03/09/20 price $37.04
Earned $4.00 per share in 2019
Adjusted book value per share $96.86 and adjusted operating bvps $66.96
4) AIG
03/9/20 price $32.81
Book value per common share of $74.93
Book value per common share excluding AOCI and DTA $58.89.
Earned $3.74 per share in 2019
5) GM
03/09/20 price $24.69A
2019 Earnings Per Share $6.00
P/E 4.78
These are just a few examples. This has been a very long three week period. Unfortunately, volatility is likely to stay with us for the near-term. If you have free money, now is the time to invest! Everything is on sale. That doesn’t mean it can’t go cheaper in the short-term, but 3-5 years out, you’ll likely be very happy that you bought!
