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  1. Apr 28, 2015 · But the intrinsic value calculation most attributed to Graham today is called the Benjamin Graham Formula, and is usually some variation of the following: V = EPS x (8.5 + 2g), orValue = Current ...

  2. Jul 02, 2017 · Benjamin Graham started that whole movement, which has been passed on through the generations. With many great investors put a big focus on margin of safety. Everybody has their definition of what a margin of safety means to them; I know they certainly do. It can be valuation based, balance sheet based, and how Benjamin Graham defined it.

    • Dave Ahern
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    What is the Benjamin Graham formula?

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    What is the Benjamin Graham formula to find the intrinsic value?

    Can the Benjamin Graham formula be used to predict future growth?

  4. Westlake Chemical's latest twelve months ben graham formula value is $54.80... View Westlake Chemical Partners LP's Ben Graham Formula Value trends, charts, and more.

    • Stock Valuation Concepts. Let’s start with the two most important concepts on how to value stocks. Key Concept #1: Stock valuation is an art. Give 5 people a paintbrush and they will paint different things.
    • Benjamin Graham Formula for Stock Valuation. The second method I use to value a stock is with Benjamin Graham’s formula from The Intelligent Investor. In case you’re not familiar with Ben Graham, he’s widely recognized as the father of value investing.
    • Original Benjamin Graham Value Formula. The original formula from Security Analysis is. where V is the intrinsic value, EPS is the trailing 12 month EPS, 8.5 is the PE ratio of a stock with 0% growth and g being the growth rate for the next 7-10 years.
    • Adjusted EPS in the Graham Formula. Before we go deep into the Graham Formula, click on the image below to get the best free investment checklist and more investment resources to load up your valuation arsenal.
    • Special Special Situations
    • Formula?
    • Hold on A Minute...
    • What This Mean For The NCAV Investors
    • A Word of Caution
    • A Shift in Focus

    I was skimming through "Common Sense Investing," a collection of writings by Benjamin Graham, when I came across a section on special situation investments. The reading was interesting to say the least. For a while now I've been thinking of investment in terms of likely upside, and likely downside. That's to say, probabilities. To me, it seems that the reason net net stocks as a whole pay off so well is because of their solid foundation of value, how far below that value they're priced, and because of their high likelihood of closing the gap. Benjamin Grahamdefines a special situation as an investment situation where the ultimate payout is independent of stock market factors. A typical example of this is a risk arbitrage play, a situation where a company announces that it entered into an agreement to sell itself to a firm for slightly more than the current price of the common stock. In this situation, the spread between the current market price and the price being offered for each s...

    Back in the 1960s, Buffett commented that a net net stock will workout roughly 80% of the time withing 3 years. This has definitely been my experience, as well. If we use this figure as the actually likelihood that a stock will work out, then we can use Benjamin Graham's formula to calculate the return you should expect to see. How's it done? Simple. Let's take a look: For all the variables, let... G - be the expected gain if successful L - be the expected loss if the investment isn't successful C - be the expected chance of success, or the expected chance of failure Y - be the holding period P - be the current price The formula then is... Indicated Annual Return = [GC -L(100%-C)] / YP Let's say that a net net stock is trading at $5, 50% below it's NCAV. If we use Buffett's assessment then assuming a rise to 100% of NCAV over a period of three years... IAR = [($5x.8) - (0x.2)] = /3x$5 IAR = 27% Of course, these are annualized returns, not compound returns, but 27% is still fantastic.

    You'll notice a questionable core assumption within Benjamin Graham's formula: why do I expect to lose no money if the investment doesn't work out? I've had a few net net stocks that haven't worked out but in general I haven't lost a whole lot. Very few of the stocks that haven't worked out have been money losers. If anything, I've sold them for around what I bought it for or they just haven't advanced to reflect full net current asset value. I'm not saying that this situation will continue in the future but given how financially conservative and how cheap these stocks are I can't see my experience turning significantly worse.

    One thing that classic Benjamin Graham value investors can do is to look at the NCAV opportunities available to them and then rank them by expected return. This is different from the blanket approach that I advocated before when laying out in our Net Net Hunter Scorecard. The scorecard can definitely yield good results because it's based on the results of academic studies that look back over a number of decades to see how well the investment strategy works. In the scorecard, I do things like screening out companies with more than 25% debt-to-equity but this wouldn't be an issue using Benjamin Graham's special situation formula because it would be just one factor in the expected return of the stock. All this means that a company with a supernaturally high debt load could be a supernaturally great buy if it's priced low enough. A company with a 200% debt-to-equity ratio, for example, could be a great investment if it will pay off 50 to 1. While it may only have a 10% chance of reachin...

    I don't recommend that classic Benjamin Graham investors put together a basket of these kind of stocks due to variance in portfolio returns. A portfolio of ten of these companies, which have a 90% likelihood of going bust, has a mathematical probability of paying off since one of these companies should workout. Unfortunately, the variance in portfolio returns means that an investor might lose all of his or her money rather than see that one stock pay off. Much too risky. On the other hand, an investor should feel free to add one or two of these low likelihood stratospheric payoff companies as part of a higher quality portfolio. A much better route might be to use the formula to assess companies that just miss your own screening criteria.

    Value investors should consider Benjamin Graham's special situation formulaa good but imperfect way to pick net net stocks. While it's imperfect, all stock selection methods have their issues to deal with. Investors should be careful about the type of assumptions their using to generate inputs into the formula and collect reliable data either through research or experience in order to solidify their assumptions. With more accurate assumptions that go into predicting whether a less than ideal net net stock will work out, the formula would prove a valuable tool by which to assess a wide range of net net stock opportunities.

  5. The Benjamin Graham formula is a formula proposed by investor and professor of Columbia University, Benjamin Graham, often referred to as the "father of value investing". Published in his book, The Intelligent Investor , Graham devised the formula for lay investors to help them with the valuation of growth stocks in vogue at the time of the ...

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