"When a common stock sells persistently below its liquidating value,
then either the price is too low or the company should be liquidated.
Two corollaries may be deduced from this principle:
1.) (...) price should impel the stockholders to raise the question whether it is in their interest to continue the business
2.)
Such a price should impel the management to take all proper steps to
correct the obvious disparity between market quotation and intrinsic
value ...."
"If the company is not worth more as a going
concern, then the stock should be liquidated. If it is worth more as a
going concern, then the stock should sell for more than its liquidating
value ... on either premise ...price below liquidating value is
unjustifiable."
"Common stocks in this category practically always have an unsatisfactory trend of earnings."
"The
objection to buying ... possibility, that earnings will decline or
losses continue, and that the resources will be dissipated and the
intrinsic value ultimately become less than the price paid."
"On
the other hand, there is a much wider range of potential developments
which may result in establishing a higher market price."
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