To find the reasonable or conservative value of a company you can think of it like a Bond (Debt) so if you buy something at 2 times book doing 16 % ROE means you are buying an 8 % bond. This assumes the company does not grow its earnings and secondly company is so good that its earnings will not drop (the market usually has a lot of trust with some history) so some large funds can think they are getting this cheap vs debt funds and if the earnings grow it will be plus. So this is the minimum value a company should trade at, off course in the short-term market can do anything but if you are buying like this or lower you will not lose money in the long term but have a big upside if the company performs as multiple will expand and earnings will also grow.
You will not get many opportunities like this but you don’t need many as you don’t have to sell, patience is the key
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