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March, 2000


Quality bargain hunters for long-term holdings may find today’s featured assets of interest. The first, a closed-end fund, Scudder New Asia Fund (SAF), recent price $19, is selling at a 26% discount to its net asset value, per "Value Line," which also says of this purchase candidate that it has a 3-5 year projected total return of 85-165%. Although it has only an average V.L. safety rating, the asset spreads its risk around, with diversification in several Asian markets. And, if you believe in the long-term profit potential of the Asia region, you cannot go far wrong with an investment that is well-allocated and selling at a price significantly below its true value. Steer clear, though, if market volatility is a turn-off. 35% is invested in Japan, 17% in Taiwan, and 16% in Korea. These economies often negatively surprise.

Our second candidate, Jones Apparel Group (JNY), recent price $25, is projected by "Value Line" to have a 3-5 year total return of 140-260 %. While it also carries only an average V.L. safety rating, its price to earnings ratio is only about 10, well below that of the average Standard & Poors 500 company. It is a splendidly better bargain than the average internet stock. What is more, Warren Buffett’s Berkshire Hathaway (BRK.A; BRK.B)* has purchased a 9.9% share of the company in the last few months. "Barron’s," "Money," and "Worth" investment publications have all recommended the shares of this company lately. Value investors Ralph Wanger of Acorn Fund and Kent Simons of Neuberger Berman Focus Fund now own over 3 million shares of JNY between them and extol its positives. Simons says (remember that game?) "It’s the kind of thing that can go up 40% and still be cheap." ("Money," 4/2000, p.44)

(*Berkshire Hathaway itself, at a recent price of $43,700 for each of its Class A shares or $1457/share of Class B, is not a bad bargain. Per Peter Lynch and Stevin Hoover, though it was down considerably last year, this just increases its attractiveness. They point out in "Worth," 4/00, p.123, that it had only gone down for the year on six previous occasions in the past 33 years and that within two years after each of those other down years it had risen 76-121%. Hoover gives the true value of each Class A share at well over $100,000 [$3333 per Class B share], based on the value of the separate pieces of this conglomerate. He says the combined per share value of just two segments of the BRK mosaic, Executive Jet and Flight Safety, is about half the current Class A share price.)


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Actually, the investment article provided here is for general information only and should not be considered as professional advice, a solicitation to buy or sell any security, or the Word of God. Investors are encouraged to do their own research while considering their personal goals and circumstances, or consult their own professional financial advisors, before making investment decisions. Neither Larry nor LARVALBUG will be liable for any losses sustained by any visitor to this site.

Value Investing / Main Index / previous / next