Forums Stock Picks Cash value

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  • Sergio FelerSergio F Member
    Post count: 21

    When Mhonish Pabrai speaks about purchasing a company for the “Cash”, I understand that he means at the “free cash flow per share”, is that so??

    Rajiv RenganathanRajiv Renganathan Moderator
    Post count: 138

    Hi Sergio

    Could you elaborate & refer to the Pabrai quote/context. What do you mean by “for the cash”. In you mean, “below cash” then the market cap being less the cash on the books i.e balance sheet.

    – Rajiv

    “Men, it has been well said, think in herds; it will be seen that they go mad in herds, while they only recover their senses slowly, and one by one.”
    ― Charles MacKay, Extraordinary Popular Delusions & the Madness of Crowds

    Sergio FelerSergio F Member
    Post count: 21

    Hi Raijv, thank you very much!, with that response I’m good, Warm regards!

    David FloodDavid Moderator
    Post count: 194

    Hi Sergio,

    This is also known as buying a company below net cash;

    Net Cash = Cash & Equivalents – Total liabilities (Inc. Off-balance sheet liabilities) & Prior claims (Preferred shares)

    You are basically getting the operating business, fixed assets and all current assets less cash for free.

    To search for these companies run a screener where you look for negative enterprise value;

    This sceener lets you search for negative enterprise value. Just make sure to avoid Chinese RTO’s (These are likely to be frauds) and financial companies unless they are in your circle of competence (These can be black boxes with off-balance sheet liabilities etc)



    Sergio FelerSergio F Member
    Post count: 21

    Hi David!.

    I really appreciate your accurate and generous response. Thank you very much and happy holidays!


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