Separating Value From Value Traps with Standpoint

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Nov. 19 (Bloomberg) – Standpoint Research Founder Ronnie Moas discusses the computer model behind Standpoint’s success and shares some of his picks. He speaks with Pimm Fox on Bloomberg Television's “Taking Stock.” (Source: Bloomberg)

Let's talk a little bit about microsoft.

What about the actual stock itself?

I knew when it was oversold, and that was back in december when it was trading at $27. when he got up to $33 in april, i got out.

It has jumped around 10% since i got out, but a rising tide lifts all boats and it went up with the market.

I think it is fairly valued and i would not be chasing it here.

How would you describe the nature of what you do at standpoint research?

You've got this computer model that you run.

Explain how that works a little bit.

It is a variable computer model that took me five years to develop.

I have put out seven recommendations in the 10 year since the development was completed and 68% of our recommendations are correct, which is a good batting average on wall street.

I have projected overlays through the ideas that the computer model is generating for me.

I'm not just saying i like and name because it has scored well on a computer model.

I'm giving you a 15 to 20 page recommendation.

You could have a stock selloff for a particular reason, and there might be a good reason for the selloff.

Absolutely.

The bias in my computer model is toward names that were oversold.

I look at its strength as an indicator when it's at the extremes.

A lot of times, you get the value trap scoring really well on my computer model and i have to separate the boys from the values and the value traps.

American apparel, made in the united states in los angeles, they have shops all over the country, what caught your attention about them?

It is not just across the country.

They have 250 stores spread out across 20 countries all over the world.

This used to be a $200 million market cap and it's down to 100 million.

I am looking at the ceo.

He owns half of the company.

$50 million worth of stock.

He has not sold a share.

In my opinion, they will double their store count over the next 7-10 years and the revenues will double close to 1.5 billion dollars.

They should be able to turn a profit of $.20 to $.30. i could see the stock doubling or tripling from where it is now over the next 3-5 years, but they will have to restructure their debt will stop i imagine they will be successful in doing so.

That is american apparel.

And it does not matter what industry the company is in.

You just apply that order to get that first look at the stock market.

That is the beauty of the model.

I can run 2000 stocks through their on all 10 sectors and there are a couple of sectors that i apply objective overlays to, but the models are not as good at those sectors as they are on others.

I have to be careful on that.

But in general, yes, i can cover all 10 sectors.

We have now recommendations spread out across all 10 sectors.

One company you are looking at is in manufacturing, bonding.

It is one we do not hear much about.

What caught my attention is that $500 million in cash with no debt.

If you eliminate the cash from the market cap, it is trading at a single-digit multiple on earnings, and it is actually a good target from -- for activists.

They can push them to have this money on the balance sheet that they have not been doing in recent years.

We are out of time.

I hope you will come back and spend more time with us.

How many times have you traveled around the world?

I've been in more than 50 countries in the last five years.

I want to thank you very much.

Ronnie moas of standpoint

This text has been automatically generated. It may not be 100% accurate.

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