NEW YORK (TheStreet) -- One year ago, I revealed a list of seven companies -- Corning (GLW), Hess (HES), Rowan (RDC), Patterson-UTI (PTEN), Omega Protein (OME), Kelly Services (KELYA) and American Greetings, a company bought out in August -- that were trading below tangible book value per share.That measure takes the more commonly used book value per share calculation (shareholders equity divided by shares outstanding), and strips out intangible assets such as goodwill, patents and trademarks. The theory here is that intangible assets can have little real value and may skew a company's true book value; it's simply a more conservative view of book value and is often used by the value crowd. That group of companies has returned an average of 50% since that column ran, versus 28% for the S&P 500 and 38% for the Russell 2000. Rather than simply screening for companies trading below tangible book, the screen I use for this search includes several other criteria:
- No financial companies
- Long-term debt to equity less than 50%
- Companies must be profitable on a trailing 12-month basis
- Minimum market cap $100 million
I'll publish a new list of companies trading below tangible book value next week, although, given the markets run-up, I expect the pickings to be rather slim. At the time of publication, the author was long Corning. Follow @JonMHellerCFA This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.