The Intelligent Investor: The Definitive Book On Value part 46. The purpose of this book is to supply, in a form suitable for laymen, guidance in the adoption and execution of an investment policy. Comparatively little will be said here about the technique of analyzing securities; attention will be paid chiefly to investment principles and investors’ attitudes. We shall, however, provide a number of condensed comparisons of specific securities - chiefly in pairs appearing side by side in the New York Stock Exchange list in order to bring home in concrete fashion the important elements involved in specific choices of common stocks | 436 The Intelligent Investor cents. What happened in the next months was literally incredible. The company lost 4 365 000 or per share. This consumed all its capital before the financing plus the entire 2 400 000 received on the sale of stock plus two-thirds of the amount reported as earned in the first nine months of 1969. There was left a pathetic 242 000 or 8 cents per share of capital for the public shareholders who had paid 13 for the new offering only seven months before. Nonetheless the shares closed the year 1969 at 8 bid or a valuation of more than 25 million for the company. Further Comment 1. It is too much to believe that the company had actually earned 686 000 from January to September 1969 and then lost 4 365 000 in the next three months. There was something sadly badly and accusingly wrong about the September 30 report. 2. The year s closing price of 8 bid was even more of a demonstration of the complete heedlessness of stock-market prices than were the original offering price of 13 or the subsequent hot-issue advance to a high bid of 28. These latter quotations at least were based on enthusiasm and hope out of all proportion to reality and common sense but at least comprehensible. The year-end valuation of 25 million was given to a company that had lost all but a minuscule remnant of its capital for which a completely insolvent condition was imminent and for which the words enthusiasm or hope would be only bitter sarcasms. It is true the year-end figures had not been published by December 31 but it is the business of Wall Street houses associated with a company to have monthly operating statements and a fairly exact idea of how things are going. Final Chapter For the first half of 1970 the company reported a further loss of 1 million. It now had a good-sized capital deficit. It was kept out of bankruptcy by loans made by Mr. Williams up to a total of 2 500 000. No further statements seem to have been issued until in January 1971 AAA Enterprises
