[pullquote align=”right” cite=”” link=”” color=”” class=”” size=””]When a stock that we own declines, we re-analyze our investment thesis and ask ourselves if it is still valid. Did something fundamental change for the company? Did we make a mistake?[/pullquote]

When a stock that we own declines, we re-analyze our investment thesis and ask ourselves if it is still valid. Did something fundamental change for the company? Did we make a mistake? We have just completed a full review and re-examination of every company in our portfolio. Our conclusion is that our portfolio companies are in great shape, are growing value over time, and are trading at huge discounts to their intrinsic economic values.

We are amazed at the bargains that Mr. Market is offering us. Howard Hughes Corp, arguably the best real-estate company in the world, trading at 50% of net-asset value. Citibank and Bank of America, two pillars of global finance that have made great improvements since the financial crisis of 2008, both trading around 50% of book value. Our basket of Korean Preference shares – all good, profitable, dividend paying business – trading at an average 55% price discount to their (already cheap) respective common shares. Israel Discount Bank, after making strong progress on its multi-year turnaround plan, trading for 50% of book value. Samsung Electronics, a global leader in consumer electronics, trading at 4-year lows and a 2 times EV to EBITDA price multiple. We are eagerly buying more of many of the companies that we own.

The above commentary has been excerpted from a letter to clients of Emerging Value Capital Management.