John Dorfman on Book Value Bargains

In his new Bloomberg column, money manager John Dorfman names some book value bargains:

In normal times I want a price-to-book ratio below two. These days, I look for ratios below 1.5, and prefer those below one.

Some people dismiss book value as a measure of intrinsic worth, saying that it is distorted by accounting conventions. Let them scoff. The fewer investors using this tool, the better it is for those of us who do.

Certainly some accounting practices do create distortions. Oil companies, for example, frequently carry promising properties on their books for far less than their true worth. On the other hand, a technology company with an inventory of aging modems may carry them on its books for a sum greater than their true worth. Yet in my opinion these anomalies are rare, and often relatively small.

Read the linked article for all the names. He reports owning Time Warner and Seaboard for clients and personally.