Long Term Investments are assets held for more than 1 year. They include the following:
- Stocks
- Bonds
- Real Estate
- Affiliates
- Subsidiaries
In the balance sheet these investments are recorded "At Cost" or "Market Price", whichever is lower. If the investment has appreciated in value it will be recorded "At Cost". Meaning it is recorded at the price the company paid for the investment.
Find out what the company has invested in. There could be a very valuable investment that has appreciated in value hiding in its balance sheet.
Examples
The Coca-Cola Company has made an investment in a beverage company called Honest Tea. They make organic beverages. They bought Glaceau, the maker of Vitamin Water. Honest Tea and Glaceau's revenue has grown exponentially over the years, therefore their value has also increased.
Johnson and Johnson has been buying the parent companies of consumer products such as Rolaids, Neutrogena, Listerine, Neosporin, etc. These are the popular health care brands in the market. More and more people buy these products over time, thus the value of Johnson and Johnson's initial investment has increased.
Warren Buffet's Berkshire Hathaway owns large shares in stocks like Coca-Cola, Wells Fargo, Kraft Foods, Johnson and Johnson, and Wal-Mart. These stocks has greatly appreciated in value since he last bought them. And they are being recorded in Berkshire Hathaway's balance sheet "At Cost".