What does Benjamin Graham has to say about (non-current) investments and the best way to incorporate them into your analysis?
In the interpretation of Financial Statements - The classic 1937 Edition it is found under chapter VII p.19 ff. he gives us a clue.
"Many companies have important investments in other enterprises, in the form of securities or advances..."
"...may appear ... under the heading of "non-current investments and advances"...usually shown ... at cost ... frequently are reduced by reserves ... difficult to estimate the true value of these investments. Where it appears from the balance sheet that these items are ...to be of importance, a special effort should be made to obtain additional information ..."
"Some investments stand midway between ordinary marketable securities and the typical non-marketable permanent commitment in a related company."
"This intermediate type is illustrated by du Pont's enormous holdings of General Motors, or the large investment of Union Pacific in the securities of various other railroads..."
"Such holdings will appear among the msicelanous assets rather than the current assets, since the companies reagard them as permanent investments.. but for some purpose (e.g. - calculating the quick assets per share of stocks) it is permissible to regard them as the equivalent of readily marketable securities."
Anyone claming that this investmentportfolio is crap must be bonkers. My advice: Watch out for the gems in japanese investmentportfolios!!!
Imagine the stock, holding such an investmentportfolio that is good proxy for corporate Japan, was a net-net stock with a viable business attached to it. :)
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