Jim Chanos is bearish and skeptical on a lot of things. Recently, he discusses with Value Walk what he considers as value plays and what are value traps.
Value stocks should contain the following characteristics:
- Predictable, consistent cash flow
- Defensive and/or defensible business
- Not dependent on superior management
- Low/reasonable valuation
- Margin of safety using many metrics
- Reliable, transparent financial statements
And these are the following traits of value traps:
- Cyclical and/or overly dependent on one product
- Hindsight drives expectations
- Marquis management and/or famous investor(s)
- Appears cheap using management?s metric
- Accounting issues
In the following Scribd article, he explains them further:
98208144 VALUExVail 2012 James Chanos
[Hat Tip Value Walk]
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