The Business of Value Investing.pdf

More Than One Way to Find Value 205

Case Study #2: Money Machine South of the Border

Ternium Steel

This analysis took place in the middle of 2007. Up until the fourth

quarter of 2008, the fundamentals of the business were slowly being

refl ected in the stock price. Then in late 2008, an unprecedented

number of investment funds were forced to liquidate positions due to

the freezing up of the credit markets. Many funds employed leverage

to juice returns. When faced with margin calls coupled with declining

Table 10.2 Sunrise Intrinsic Value Ranges

Stock Price Intrinsic Value Margin of Safety (%)

$ 25 $ 54 to $ 60  50%

$ 30 $ 49 to $ 53  40%

Figure 10.1 Sunrise Senior Living Stock Price Chart

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