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by queuebert 979 days ago
How can they be worth less than their equity? Do they have negative goodwill? If so, that's hilarious.
4 comments

Accounting measures aside, have you ever heard anyone express positive sentiment toward GS? They have negative (colloquial) goodwill in my book, although I'm definitely highly influenced by Buffett's summary of his experiences with them.
Could be several things:

- negative goodwill

- investors think their assets are not worth the sticker price

- looming lawsuit acts like a liability but may not show up on the books yet (see Hawaiian Energy - Hawaii wildfires - valustox.com/HE and Verizon - lead cables - valustox.com/VZ)

- investors expect a lower profits, which sort of translates into being equivalent to their assets being worth less.

Some companies, like banks, have vast assets, vast liabilities, and moderate earning power. Tech companies have almost no assets, but huge earning power - because the real asset is arranging engineers in a certain way, and that's hard to measure on a balance sheet.

You'd be surprised how many publicly listed companies trade below book value...

(And they're not always a bargain)

Banks often trade at book values less than 1 due to the way their business works