Tag Archives: BCPC

Part 2: Using Value-Line Case Study-Balchem (BCPC)

Reach of Federal Power is Questioned (Obama Care)

It’s “the old Jack Benny thing,” Justice Scalia said, invoking the joke where a robber holds up the famously stingy comedian and says, “‘Your money or your life,’ and, you know, he says, ‘I’m thinking, I’m thinking,'” Justice Scalia said. “It’s funny, because there is no choice.”

BalChem (BCPC)

Initial post on using Value-Line:http://wp.me/p1PgpH-Bc

Then I posed a case study of a Value-Line with the market prices and name removed here:

The company in the case study is Balchem: https://rcpt.yousendit.com/1439168384/30543fcee251a06356192fe6d4de2c7f

Take a few minutes to review the Value-Line to determine if your perceptions of your initial analysis changed. Ask if the company is worth studying further. There is no correct answer; it depends upon your investment philosophy.

Part 3 will be my discussion of Balchem using the Value-Line posted tonight or early tomorrow. In the spirit of full disclosure, I have owned Balchem (BCPC) back in 1996 – 1999 (before the 10x rise in price!) so take my words with an antidote. I bought on the basis of book value, made money, but I had no clue back then of what was a good or bad business. I was buying on the basis of cheap metrics. You can make money but still make a mistake. Ignorance was my blinder.

Below are a few more Value-Lines which I will discuss in the next post (part 3)




Imagine sorting through a huge pile of mail. You need to discard companies that are of no interest. Value-Line publishes updates on each company about 4 times a year, so you will become more adept sorting companies the more times you review Value-Line. At first, the process will be time-consuming, but you will learn more about companies, valuations and market perceptions.

Greatest Company Analysis, Studying Franchises and More………….

“The average person can’t really trust anybody. They can’t trust a broker, because the broker is interested in churning commissions. They can’t trust a mutual fund, because the mutual fund is interested in gathering a lot of assets and keeping them. And now it’s even worse because even the most sophisticated people have no idea what’s going on.” –Seth Klarman

I’m passionate about wisdom. I’m passionate about accuracy and some kinds of curiosity. Perhaps I have some streak of generosity in my nature and a desire to serve values that transcend my brief life. But maybe I’m just here to show off. Who knows? –Charlie Munger

Best Company Analysis

Several experienced investors (including charlie479) have called the lecture in the link below one of the best company analysis ever done. A Charlie Munger speech about worldly wisdom in solving the problem of building a trillion-dollar business almost from scratch.  http://www.scribd.com/doc/76174254/Munger-s-Analysis-to-Build-a-Trillion-Dollar-Business-From-Scratch

Analysis of a Franchise: Linear Technology

An analysis of Linear Technology’s franchise characteristics: http://www.valueinstitute.org/viewarticle.asp?idIssue=1&idStory=109

Do you agree with the above analysis? The five companies below are considered by some to be franchises. Build a database of franchise companies to eventually purchase at the right price for you. Write down what you think are the sources of competitive advantage. Can you arrive at a ball-park value?  If not now, then set aside for future reference. Note the level of ROIC, operating margins, use of excess capital, growth and investment needed for growth and the history of returns.

Linear:                      LLTC 25 Year    LLTC_VL

Balchem:                  BCPC_35 Year   BCPC_VL

Applied Materials: Charts 35 year AMAT  AMAT_VL

Analog Devices:      ADI_35 Year  ADI_VL

Intel:                         INTC_35 Yr   INTC_VL

Now is the time to dig into the Value Vault and read, Competition Demystified by Bruce Greenwald. A study guide is offered here (Thanks Sid): http://competitiondemystified.com/index.htm

Be the Best

To be the best, you will need to have character, be independent and tough like Joker: http://www.youtube.com/watch?v=gYxEIyNA_mk&feature=related

You will need to develop your skill in understanding and recognizing franchises. Eventually you will show skill like this: http://www.youtube.com/watch?v=HwtMPdMFXQA&feature=related or take it to the hoop like Jordan: http://www.youtube.com/watch?v=U17x7gJ33bY&feature=related

I have never held a ball in my hands, but even I know Jordan is practicing magic not basketball–but, then again, he almost didn’t make his high school team.

 A Good Data Source

Accounting, business studies, and data here: http://mgt.gatech.edu/fac_research/centers_initiatives/finlab/index.html

Freedom vs. Tyranny

A satellite view of tyranny vs. freedom: North vs. South Korea    http://mjperry.blogspot.com/2011/12/legacy-of-n-korean-dictator-kim-jong-il.html

Answer to Economic Question Posed in previous post

The European Central Bank (“ECB”) is offering euro zone banks loans of up to 3 years on Dec. 21 at a rate of 1%. A Wall Street/City of London Whiz can buy Spanish paper at plus 2% on money borrowed from the ECB at 1%. Brilliant! This is going to deluge the Euro zone with money and become extremely bullish for the Euro zone markets and price inflationary.  How else do central bankers know how to deal with a financial crisis. Print.

A viewpoint of America’s involvment in the Euro crisis: http://www.thedailybell.com/3379/Ron-Paul-Beware-the-Coming-Bailouts-of-Europe

Have a good evening.