American International Group (AIG) – Analysis 2015-02-17

AIG keeps increasing its book value year over year. Annual compounded growth rate last 3 years was 13,24%. AIG's goal from now on until 2017 is to grow its book value by 10% yearly. Book value has increased by 13,22% last 12 months. Buybacks under book value is ongoing. ROE target long term is 10%. Last 12 months ROE was 6,69%.

What is this business worth?

Asset value: Tangible book value per share currently is at 77,69 USD/share.
Last years book value increase of 13,22% and AIG's goal of increasing 10% year on year until 2017 is realistic. Buybacks are contributing alot to this. With an annual requirement of 10% return AIG is worth at least book value. 44% upside currently.

Earnings power value: 10% required return a year equals an upside of 28% looking at last 5 years average earnings. Earnings have to come up from average last 3 years numbers though to justify book value if disregarding buybacks.

Disclosure: The author had a long position when this post/analysis was written.

AIG-2015-02-17

AIG 2015-02-17

Bonheur (BON) – Analysis 2015-02-12

Earnings are cyclical, book value steady although not compounding at a great rate recently.

Last 5 years shows an annual compounded growth rate of 3,62%. Last 3 years shows an annual compounded growth rate of 2,71%.

Does this mean that the business is worth 34% of its tangible equity value?

No. Even if Bonheur might have to write down some of their assets in the future because of rigs not generating any income, it is not likely that they would have to write down more than half of their assets.

What is this business worth?

Asset value: Tangible book value per share currently is at 194 NOK. Todays price 67.

Earnings power value: 10% required return a year equals an upside of 79% looking at last 3 years average earnings, 108% looking at 5 years average earnings and 206% looking at 10 years average earnings.

If you believe in reversion to mean there is certainly upside.

Disclosure: The author had a long position when this post/analysis was written.

BON-2015-02-12BON 2015-02-12

Gazprom (GAZ) – Analysis 2015-02-10

The rouble has lost value to the euro. Oil price has decreased as well. Price per share has followed.

And what about the fundamentals of Gazprom?

Tangible book value per share keeps increasing, even though not at the same rate as normal because of a temporary decrease in earnings.

What is this business worth?

With a requirement of a 10% yearly return and an average of 14,74% ROE the last 10 years. Gazprom is at least wort its tangible book value. That would mean an upside of 270%.

Disclosure: The author had a long position when this post/analysis was written.

GAZ-2015-09-10GAZ 2015-02-09

Cnooc (CEO) – Analysis 2015-01-29

Cnooc LTD (CEO) has been compounding its wealth at an unbelievable rate of 19,56% per year the last 10 years. Including last years dividend it is 24,45% as a total yearly return.

What is such a business worth?
It depends on your required yearly return. I require 10% in my calculation.
With that in mind its value could easily double considering you currently can buy a piece of this business at a 5% premium compared to the actual tangible book value per share.

Why is the market not liking the business?
I would say it is mainly connected to the low oil price at the moment.
As far as I can see though the company keeps compounding its money at a decent rate.
Interim report 2014 showed a 7,28% increase of shareholders' equity compared to end of 2013.

Disclosure: The author had a long position when this post/analysis was written.

CEO-2015-01-29CEO 2015-01-29