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Rewriting the Books for Barnes & Noble

The market's valuations for and its parent are making a mockery of what we learned in business school.
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Either this stock market is making business-school valuation courses a joke, or the professors have changed the curriculum to reflect heightened irrationality instead of sober rationality.

But there is no way they are still teaching courses that I saw during my crashing of classes at



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situation. The papers were all bemoaning that wasn't that good a deal. (That's lunacy -- a good deal is one that makes the buyers money. Period. Boy, are we spoiled.) But anybody can see that the subsidiary is worth more than the parent.

That's plainly ridiculous.

However, what do you do if you are teaching business school and you are trying to understand valuation? For example, I remember a class where we spent five weeks on valuing closed-end vs. open-end funds. The discrepancies, infinitesimal in comparison to the oddity of BNBN/BKS, are now strictly of the "who cares?" variety. I mean like, how can you care about a 5% differential because of liquidity and time value of money, when a parent is worth less than its majority-owned subsidiary.

Making matters worse, the academic way to rectify the disparity would be to go long parent and short sub!! Hoo-hah with your money, ivory-tower people!

Seriously, it is one thing to make a mockery of the Phillips Curve. Hey, the economies of the world can change, and it is perfectly expected that some parts of my Ec 10 class no longer have validity.

But when sub is bigger than parent, and people still think the launch of sub was disappointing, what is the point of taking securities-valuation classes?

Except to learn what to bet against!

James J. Cramer is manager of a hedge fund and co-founder of At time of publication, his fund had no positions in any stocks mentioned. His fund often buys and sells securities that are the subject of his columns, both before and after the columns are published, and the positions that his fund takes may change at any time. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Cramer's writings provide insights into the dynamics of money management and are not a solicitation for transactions. While he cannot provide investment advice or recommendations, he invites you to comment on his column at