Conversion Solutions Holdings (fka CSHD)

[JJSeabrook]

Fair value is NOT $7.21 per share! $7.21 is BOOK VALUE. A stock normally trades at a multiple of BOOK VALUE. What is BOOK VALUE?

The Investopdia.com definition of BOOK VALUE is as follows:

Book Value
1. The value at which an asset is carried on a balance sheet. In other words, the cost of an asset minus accumulated depreciation.

2. The net asset value of a company, calculated by total assets minus intangible assets (patents, goodwill) and liabilities.

3. The initial outlay for an investment. This number may be net or gross of expenses such as trading costs, sales taxes, service charges and so on.

In the U.K., book value is known as "net asset value".


Book value is the accounting value of a firm. It has two main uses:

1. It is the total value of the company's assets that shareholders would theoretically receive if a company were liquidated.

2. By being compared to the company's market value, the book value can indicate whether a stock is under- or overpriced.

3. In personal finance, the book value of an investment is the price paid for a security or debt investment. When a stock is sold, the selling price less the book value is the capital gain (or loss) from the investment.

Check this out too!

Book-To-Market Ratio
A ratio used to find the value of a company by comparing the book value of a firm to its market value. Book value is calculated by looking at the firm's historical cost, or accounting value. Market value is determined in the stock market through its market capitalization.

Formula:




Basically, the book-to-market ratio attempts to identify undervalued or overvalued securities by taking the book value and dividing it by market value.

In basic terms if the ratio is above 1 then the stock is undervalued, and if it is less than 1 then the stock is overvalued. This term can also be inversed to be the market-to-book ratio.

http://www.investopedia.com/terms/b/booktomarketratio.asp

Just a little reading while we wait to be sitting post merger.

JJ


Posted by: Braden32601
In reply to: new2market who wrote msg# 21816 Date:7/29/2006 9:27:59 PM
Post #of 21839

i would agree..If fair value is $7.21 or whatever, I would suspect it opens at $15 or set price and trades to fair value-based on what the market feels..Agree, if people haven't heard that interview, they should listen..could you provide the link and thx in advance..good point...