Market Price Chronically Understates Intrinsic Value

"Jim Robison had always stated that the basic objective of the company was to increase the intrinsic value of the common stock. His theory was that the market value would ultimately reflect true intrinsic value. He was wrong. In the 1970s, market prices of most companies whose shares are publicly traded do not reflect true in- trinsic values. The many tender offers for shares of public com- panies at prices well above their quoted market prices is clear proof that this is true."

"versified company in the United States, don't be worried about taking their shares on an acquisition even though the multiple is high. Where there might have been a serious drop in the value of their shares in igy^, even if they had failed to increase their earnings every quarter as they did, the management of that company is so superior that in the long run, taking their shares would have been far preferable to selling out at a low price the way we did. At the present time, Emerson has now completed twenty-one years with a perfect record of having increased their earnings per share every quarter over the prior quarter during that entire period."