Apples, Yes the majority of stocks I invest in are speculative including CNP. But I use DCF models on their resource to determine a potential value. It not that hard to value 100million tonnes of high grade iron ore & relate that to the current market capitization. It easier where there is a resource to value & you have to be very conservative. But it valuing 100 million tonnes of iron ore harder than valuing banks assets or shopping centres? I have never been about collecting dividends, it has always been about capital growth. Sure one day CNP may pay a dividend, but I am more interested in what price CNP will be at when it pays a dividend i.e. its capital growth/appreciation. If CNP paid a 10 cent dividend as an example on 1,000,000 shares brought today for say 35 cents, cost would be $350,000 dividend $100,000, but the share price probably would be above $1. So the $350,000 would probably now be $1,000,000 plus & generating $100,000 pa. The key factor is not the $100,000 dividend but the $650,000 gain on an outlay of $350,000 i.e. about 185% gain on invested funds. I am prepared to wait up to 2 years if I know there could be a gain of 185% on funds used. Secret to big wins is patience & also getting rid of the non performers early. Everyone has to develop their own style. Swap & I are both value investors but he uses a more conservative method of finding his value investments & I am sure he wouldn't be interested in my speccie mining plays, but rest assured they do work for me. Regards Buffett PS No investment advice given on any shares, please do your own research.
CNP Price at posting:
0.0¢ Sentiment: None Disclosure: Held
