In reviewing HNNA's balance sheet for 2019, I used the Other Intangibles of 80.6M in calculating the Tangible Book Value Per Share resulting in a negative TBVPS. If I used the Goodwill line item instead, then the TBVPS becomes positive.
I assume that since the stock is rated as Enterprising, the TBVPS is positive and that the Goodwill line item was used.
My question -- should the Other Intangibles been used instead?
Numbers from the balance sheet:
Shareholder Equity: 75.5M
Other Intangible Assets: 80.6
Total Shares: 7.92M
TBVPS = (SE - Intang. A)/Total Shares
I also did the calculation as:
Total Assets: 110.2M
Total Liabilities: 34.7M
TBVPS = (TA - Intang.A - TL)/Total Shares
Secondary question -- which is the more appropriate calculation of TBVPS?
Excluding Intangibles and Goodwill
Thank you for your forum post, chaeuber!
Book Value Per Share (BVPS) calculations these days do usually include Goodwill and Intangibles. Tangible Book Value Per Share (TBVPS) calculations very specifically restrict themselves to Tangible Assets.
So the calculation would be something like:
TBVPS = (Total Assets - Intangibles - Goodwill) ÷ Shares Outstanding
Graham used Book Values only for Defensive quality stocks. He used Tangible Assets for evaluating Enterprising and NCAV quality stocks. He also wrote quite extensively about the financial and mathematical aspects of using Intangibles in stock valuations.
Thanks for the clarification.
Thanks for the clarification. I missed that subtlety that had TBVPS using Net Total Assets.
Is there any value in looking at a metric that considers Book Value after accounting for Intangible Assets, i.e. (Total Assets - Intangible Assets - Total Liabilities)/Shares Outstanding?
In the case of HNNA, this value is negative because its total assets are lower than the sum of its Intangible Assets and Total Liabilities.
The website has been very educational -- thank you!
Utilities and Financials Sub-Framework
Thank you for your kind words, chaeuber!
Please note that Serenity receives its TBVPS values from its data vendor, and does not calculate them independently.
Also, Hennessy Advisors Inc (NAS:HNNA) being in the Financial Services sector would need to be appraised using the Total Assets and Equity:Debt sub-framework where TBVPS values are not used.