Value Investing

Value Investing in Middle East Markets. This piece is from FT's Wealth Section (3/14/2006):

"Sharif Atta, an analyst with Emerging Markets Management's Middle East fund, says: "Being a focused, value-based investor works well in those markets, which are very inefficient. For example, stocks in that region trade at an average P/E ratio of 25-26, with (projected) earnings growth for 2006 of 24 per cent. Our fund, in contrast, has stocks trading at an average P/E of 12, with the same earnings growth."

Harvey Sawikin, of New York's Firebird funds, says James Passin, his partner, tripled his money in Solidere, a Lebanese real estate company. "Now, it is our view that that market is dangerously overvalued." There certainly has been a detectable increase in Beirut's Blom index, from 639.35 in March of 2005 to 1,694.44 early this month. The actual high in the Blom was at the end of January, when it reached 1,934.21.

Even so, a Lebanese cement company, Ciman Blanc, trades at a P/E of about 11 and a price to book of 1.61 - considerably cheaper than cement companies such as Lafarge or Cemex and with a higher earnings growth. This would, apparently, illustrate Mr Atta's point about the values for selective investors"

I could say the same thing about Turkish markets. The stock market is not overvalued and it is possible to find real values. My most recent acquisitions are KONYA and DOAS, and both companies have P/E ratios less than 10. I expect the growth rate of these companies to be around 7-10%.