This is my first posting so just to let you know my stance - I am a follower of Buffet and Graham and take a long term value-growth approach to investing. Have a substantial portfolio of just 5 stocks (sold my business so all assets now in the market) and aim for a 15% CAG. Since running portfolio myself since Jan 01 have returned a 13% CAGR so not quite hitting the mark but long term still feel confident.

In my opinion, BMY looks about 20-25% below intrinsic value that means anyone, like me, thinking of buying, there's a little room to be wrong and have Warren Buffet and Ben Graham behind us. Here's asummary of my reasons:

* Owner earnings last year (2001) were #6.05 million (earnings less capex plus amortisation and depreciation).
* Discount these future earnings at 15% (Buffet's number) with only half the historic growth (9.5%)to be on the conservative side and the intrinsic value is #6.68 per share (currently #6.17) So, any growth above half the historic rate since 93 and it's selling at below intrinsic value
* Look at it another way, with currently around #25 million in cash this means actual cost of the business is around #82 million (#107 market cap minus the #24 cash).
* Even if we assume that the goodwill valued at #11 million is worthless then you could buy the business for #93 million net
* Per share that's #5.98 (current price #6.17)

Then sit back and think - with the rights to HP 1-4 already out there and 5 & 6 to come, with a renewable audience every 5-10 years, I see long term value that just does not seem to shown in the current price. This is like Disney putting little value on their old films like Snow White and Jungle Book which can be re-released every seven years or so.

People are saying that HP may be as much as 50% of profits. I hope they're right - becuase if BMY can repeat even half the HP success every 5-10 years, I think it has a very positive long term recurring income stream. Add in the excellent reference portfolio (who didn't have a Colins Gem dictionary) and I rate BMY a good long term prospect.

Imagine you've got to buy a share and go away for 5 years - when you got back I bet a new generation are reading HP, and the we'll still be buying dictionaries and who's who, they'll still be bird watchers and no doubt a few authors like Trolloppe will still be wriiting best sellers.

With growth like we've seen, an HP5 to come, I think that a PEG of 0.91 (PE over the growth rate) is low enough to make me want to buy. And with a quick ratio of 1.77 and a current ratio of 2.24, it has a pretty sound balance sheet behind it.

Ben