LONDON — One of Warren Buffett’s famous investing sayings is “be fearful when others are greedy and greedy only when others are fearful” — or, in other words, sell when others are buying, and buy when they’re selling.
But we might expect Foolish investors to know that, and looking at what Fools have been buying recently might well provide us with some ideas for good investments.
So, in this series of articles, we’re going to look at what customers of The Motley Fool ShareDealing Service have been buying in the past week or so, and what might have made them decide to do so.
Trading at a discount
The major U.K. banks have turned in some fantastic gains in share price over the past 18 months. Lloyds leads the pack by some considerable distance, with a 150% rise. But the 68%, 60%, and 42% rises recorded by Barclays PLC (ADR) (NYSE:BCS), Royal Bank of Scotland Group plc (ADR) (NYSE:RBS), and HSBC Holdings plc (ADR) (NYSE:HBC) respectively are also pretty impressive.
With those sorts of gains, there’s always the temptation to take a profit, especially if you think there may be a market correction (as seem to be currently happening in Australia). But while some people were selling Lloyds last week, others were buying Barclays PLC (ADR) (NYSE:BCS). Or perhaps they were the same people, swapping one company that may have peaked for another with more yet to offer. Whoever they were, they put Barclays in the No. 6 spot in the latest “Top Ten Buys” list*.
One thing that might have made Barclays PLC (ADR) (NYSE:BCS) attractive is the fact that it’s currently trading at a discount of over 26% to its net asset value (NAV) as of 31 March. Even its net tangible asset value — a more conservative measure of a company’s worth — is around 13% higher than its current share price of 297 pence. A bank should trade above its NAV, so the discount may suggest that Barclays PLC (ADR) (NYSE:BCS) share price has some way yet to go.