Stock price relative to book valueJust want to demonstrate something...Historically (just the past 12 months or so) KFS has traded at a share price that is approximately 68 - 70% of the recorded book value as a result of concerns over debt, direction,etc....
For example
May 14 - Book value was $3.26 and Share price was $2.25 or 67% of book
Aug 13 - Book value was $2.91 and share price was $2.05 or 70% of book
Nov 12 - Book value was $2.88 and share price was $1.45 or 50% of book
Today's price is is 1.25 or about 43% of the book value.
A - For us to get back to historic price to book we would have to trade around the $2.02 mark.
B - For the current price to match historic price to book ratios - book value will have to have gone down to $1.78 i.e. drop 60% further.
So which will happen A or B or ?
Book value has been decreasing however the rate at which this is being done is slowing conisderably and dare I say 'bottoming"? the last quarter only change slightly....does anyone think it can drop 60% more from these levels??
So the question are these?
1- Has this recent pressure been primarily driven by tax loss selling combined with not to stellar of a quarter announced back in the beginning of may?
2. Will $1.20 support hold? or is KFS going to have further erosion of book value?
3. Will we trade once again at historical price to book rates?
Lot of potential for the valuation of this company from these levels in my opinion, however some unknowns as well. I think the risk from this level vs the potential reward makes it a buy. I continue to add to my position daily based on the recent pop and pullback and given the historical tendencies of this stock with respect to price to book.