Tag Archives: PZN

An European Blog and Search Strategy


Jacob Wolinsky of http://www.valuewalk.com pointed out this blog on European markets. Subscribe to learn more about investing outside the U.S.  You should look in the areas of dislocation like Europe.


Jacob writes, “My good friend Tim Du Toit is a value based investor in Germany. He has over 20 years in money management, and many years of experience in value investing. On the side he runs a blog http://eurosharelab.com about value investing containing lots of good ideas for European equities, behavioral finance etc.

Search Strategy

Do not forget to watch the stock 52-week new low lists. There is tax-loss selling that occurs until end of the year. If you can find a stock you are familiar with on the list and know its prospects are good, you may have the benefit of uneconomic–in regards to the company’s prospects–selling due to tax losses. Chrysler, many years ago, comes to mind. It started the year at its low around $3 per share and continued to climb to around $60 by mid-Year.

About three weeks ago (Nov. 15th) , I mentioned this strategy. http://csinvesting.org/2011/11/15/pzena-pzn-disappointment-despair-and-tax-loss-selling/

Of course, the markets have risen approximately 10% since the November 15th post, but PZN has risen 25% or more.  Operationally, nothing has changed and PZN is not leveraged on its balance sheet. I am making an assumption that some of the selling pressure a few weeks ago was due to non-company factors.

To search go to the new low lists found here: http://online.wsj.com/mdc/public/page/2_3021-newhinyse-newhighs.html



Pzena (PZN) Disappointment, Despair and Tax Loss Selling

A reader has asked about search strategies and I plan to do a more indepth post on search strategies including screening techniques.

Some people think of what Thanksgiving may bring while I look for tax loss selling in small, obscure, and deeply disappointing stocks.

Here is one company that might fit the bill:

To understand the depth of the disappointment we might compare PZN to other small caps:

I have had enough

When I go to www.pzena.com and look at their recent press release I see $13.7 million in managed assets so a low-end valuation of assets under management (AUM) might be 2% or (2% of 13.7 billion or $274 million divided by 65 million shares (both A & B) or $4.23. Enterprise value is about $200 million after subtracting $38 million in cash and EBITDA is around $45 million (there isn’t much capex with human capital). If assets stabilize, then perhaps asset values are above enterprise value–I might have a margin of safety.

Mr. Pzena almost blew up his firm with investments in Citigroup (“C”) during the 2008/2009 crisis. His firm’s equity performance since then has been good but he has to maintain good performance to turn his three and five-year performance record to top quintile performance. Go here: www.pzena.com

Ok, so that is a reason I would then go to the 10-K and dig deeper; there is enough here to make it worth my time to spend another hour or two. Please, this is NOT an investment recommendation since there may not be enough of a cushion to have a comfortable margin of safety. Also, there may be more attractive alternative investments than this one.

The main point is to look for disappointment. Now I have no proof that there is tax loss selling but with the company underperforming the Russell 2000 for several years and the recent decline during this tax loss window (Oct. – Dec.), I am making a supposition that some investors are making a tax decision rather than an investment decision.

Let’s revisit this in 6 months to see whether my thesis has more substance.