Research Reports of Intrinsic Value

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Posted by Bob on August 27, 19100 at 07:42:16:

Thorough in-depth research reports that include an estimate of intrinsic value of common stocks are not readily identifiable. This is due partly to the ambiguity of the concept "intrinsic value" and partly to the way brokerage and private research reports are packaged and marketed.

Some private research firms specialize in doing so-called fundamental analysis, and their analysts estimate a proprietary version of intrinsic value among other aspects of stock valuation. Some of them can be found by searching the Internet.

Firms and financial analysts who do laborious insightful studies of "intrinsic value" of common stocks to seek undervalued situations have an obvious interest in not immediately sharing this information with the public. The report versions that are available in the public domain, even at a small price, are condensations that out-of-date in the sense of already having been acted upon by the primary client. Nevertheless, such reports can sometimes serve as useful models of how to do your own studies of intrinsic value in general and of given stocks of specific companies in particular industries.

For studies by analysts employed by brokerage houses, the analyst authors and the brokerage firms are the first to act on the study findings for their own account. Next in line to learn about the study results are the institutional investors. Next in line to benefit from the study conclusions are the wealthier individual investors. Last in line to see the study are the less-wealthy individual investors (the public). For stocks that are not actively traded or that don't have a large free float, the subsequent buying of an undervalued stock can sometimes create a self-fulfilling prophecy, and this opens an avenue for potential stock price manipulation.

The primary outside client of an independent research firm for such an original study of an undervalued common stock might pay from $10,000 to $50,000 or more for a single report. Needless to say, the report would be highly confidential.

As Robert A. Heinlein said: "There ain't no such thing as a free lunch."

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