Your Best Investment For the Future: You

What are the best investments for the coming year, 2009? Are they stocks,bonds and real estate, or are they  commodities such as oil and gold? After all the stock markets have taken a big hit this year down some 35-40%.  Oil has also rolled over  or should I say fallen off a cliff trading down as much as 110 points from its high of 147 a share earlier this year. So there must be plenty of good bargains in all this mess, right? Well sure there are plenty of good bargains out their, but probably the best one that you can make first, is in yourself. That's right yourself. Starting your own business is one of the best investments one can make. Unlike investing in stocks, bonds, real estate and other securities where you are a passive investor you have direct control in your own business. Your the President, the Boss man , the Sole Decision maker. Most of us rather have someone else do the work for us, which is always nice, but this comes with a price. By investing in yourself you are allocating the cost in your business much like a large company makes. So before you go laying out thousands of dollars in anyone of the investments mentioned, think about investing in yourself first.

Year-End Tax Selling???

Will we see year-end tax selling this year? That's a question that will be answered in just under two weeks, as December comes to a close and 2008 is almost history. What is year-end tax selling anyway? Investors holding beaten down or depressed stocks will usually sell them at year end to take the tax loss. This can be a good strategy if the investor has capital gains in other securities or investments. This year the market has been very unkind to  investors. Stocks that are hovering near their lows are usually the ones that are pushed down further during this period. However studies have been shown that stocks trading near their lows in December often outperform the market going into the first several weeks of the new year. Many professional traders often play this tax selling game. The Long term investor only needs to sell  if he finds a better deal elsewhere or if he has profits to match against the losses. 

STOCKMANMARC

Sears, AutoNation, & Savy Billionaires: Gates & Lampert

While many analyst and investors seem to be beating up on companies such as Sears Holdings(SHLD) and AutoNation(AN) investors Eddie Lampert and Bill Gates continue to buy shares. Why? The economy has not been this bad in at least one or maybe two generations. Sears is a retailer who seems to be out played by competitors WalMart(WMT), Target(TGT) and Best Buy(BBY). Then their is AutoNation that is caught up in the Big Three Auto Debacle of Ford(FD), General Motors(GM) and Chrysler. Why are these Billionaires pouring money into these companies? Do they see something that the majority does not see?

"Just recently UBS initiated coverage of the stock with a ‘’sell” rating Thursday, Sears needs to come up with a solution for its operating problems. Many of them involve the basics of retailing: growing comps, executing on merchandising, improving marketing. Without a strategic operating initiative, Sears won’t be able to distinguish itself from the competition in the crowded and stagnant retailing sector, and thus won’t be in a position to reverse a steep sales decline. Also short sellers have also taken an extremely bearish stance on the retailer, as more than 19 million SHLD shares have been sold short. This accumulation of bearish bets accounts for 17.6% of the company's total float, and is 8.5 times the stock's average daily trading volume. Should the equity continue its downtrend, these bears could add to their winning short positions, pushing SHLD even lower."

So what is it that is going on with these two companies? Basically Wall Street is saying these companies suck. In the case of Sears their saying that Sears has a flawed business model and that it is NO SPECIAL retailer. In the case of AutoNation, Wall Street is saying with all the negative press on the auto manufacturers we don't want this one either. Does any of this hold true? Maybe, at least in the short term it does. But for the shrewd business men that I think Gates and Lampert are the answer is a NO!

Is their something more going on here? Well in my humble opinion I think their is. In the case of Sears, yes it is a retailer that does not shine as bright as WalMart or Target, however as I have stated in earlier posts that it sits on alot of untapped Real Estate as well as BRANDED names- Kenmore, Craftsman, Diehard and LandsEnd. Most investors already recognize this and it is talked up in the media over and over. However, I think their is a bigger picture going on with these companies than meets the eye. WallStreet has ALWAYS been short term oriented, their job is to play salesman and to constantly make that commission dollar. While Lampert and Gates are making a bigger play which may take several years to pan out. Can the passive investor make money here? I think he/she can if they have patience and due their own research.

This is an interesting case to study because I think it is more than just a rich guy buying a stock and making 20 or 30%.

related links:

http://stockmanmarc.blogspot.com/2008/10/sears-not-just-your-average-retailer.html

http://stockmanmarc.blogspot.com/2008/11/sears-holdings-esl-investments-mr-eddie.html

http://finance.yahoo.com/news/Gates-Lampert-keep-buying-apf-13871819.html

The author suggest further research before investing.

Author is long SHLD

Update! Buffett Again AddsTo Burlington Northern Santa Fe Railway

Once again Buffett is adding to his position in Burlington Northern Santa Fe (BNI), bringing his total stake in the company to nearly 20%. Buffett first announce this position back in the spring of 2007, if you remember he was saying he wanted to do a huge deal, could this be it? Since the market has taken a dive this year he has been on somewhat of a buying binge, with other purchases of Goldman Sachs(GS), General Electric(GE) in which he got preferred shares in both these companies. He has also announce plans to buy all of Constellation Energy(CEG) for $26.50 a share. Below is a direct link to Berkshire Hathaway's most recent buys of Burlington which were on 12/8 & 12/9.

http://www.sec.gov/Archives/edgar/data/109694/000118143108066742/xslF345X03/rrd226027.xml

Ben Graham Nuggets Part 2

The Market Crash of 2008 has created many opportunities for the investor especially the most prudent of investors- the Value Investor. While many stocks look like bargains not all are. Many are value traps however many might be diamonds in the rough. One of Ben Grahams strategies while managing money during his 30 years of running "Graham-Newman Partnership" was to buy a basket of beaten down stocks . While there are many stocks currently that fit in the mold or come close to Grahams strategy here is the latest list:

All issues mentioned have a current ratio better than 1.5, a book value under 1.5, a p/e ratio under 15, positive eps growth over last 5 years, very low or no debt, and pay a dividend of at least 2 percent or better.

7 Ben Graham Nuggets

Williams Pipeline LP(WMZ)- Williams Pipeline Partners L.P. owns and operates natural gas transportation and storage assets in the United States.

Lufkin Industries(LUFK)- Lufkin Industries, Inc. and its subsidiaries engage in the manufacture and sale of oil field pumping units, power transmission products, and highway trailers.

Bebe Stores(BEBE)- bebe stores, inc. engages in the design, development, and production of womens apparel and accessories. Management holds a large stake in this one.

Heidrick &Struggles(HSII)- Heidrick & Struggles International, Inc. provides executive search and leadership consulting services in the Americas, Europe, and the Asia Pacific.

Titanium Metals(TIE)- Titanium Metals Corporation produces titanium melted and mill products.

Williams-Sonoma(WSM)- Williams-Sonoma, Inc. operates as a specialty retailer of home products.

Intersil Corporation(ISIL)- Intersil Corporation is a global technology leader specializing in the design and manufacture of high performance analog semiconductors.

More Ben Graham Nuggets here:

http://stockmanmarc.blogspot.com/2008/10/few-more-ben-graham-nuggets.html

*These are not recommendations but ideas for further study before investing.

Warren Buffett Is Adding to His Train Set

At 78 years old Warren Buffet is still playing with CHOO CHOO TRAINS, but their no longer the Lionel Trains from childhood day's. Looks like the Oracle of Omaha is amassing a large position in his favorite railroad company Burlington Northern Santa Fe(BNI). Buffett has been acquiring a position in this company since early 2007 and buying it on dips in the $70-80 range. He has also used the tactic of selling puts on the stock which pays him  similar to getting a dividend. If the stock hits his strike price the stock is put to him . If the stock never hits his strike price he pockets the option premium. Earlier in the year the stock almost hit $115 per share but has fallen back with the over all market. Here is a link to Berkshire Hathaway's(BRKA,BRKB) current filing.

http://www.sec.gov/Archives/edgar/data/109694/000118143108065808/xslF345X03/rrd225536.xml

also be sure and check the link to Gurufocus:

http://www.gurufocus.com/news.php?id=39652

Mr. 1 Up On Wall Street: Peter Lynch

Many are already familiar with Peter Lynch, but for those that are not Mr. Lynch managed Fidelity's Magellan Fund(FMAGX) from 1977 to 1990. At the time the Magellan Fund was one, if not the biggest fund with assets under management. The Fund was always ranked as one of the top performing funds through out his tenure. In fact Mr. Lynch beat the S & P 500 Index 11 out of 13 years while accumulating a annual average return of 29%. He is also known for a couple books "One Up On Wall Street" and "Beating The Street" which should be on any Value Investors bookshelves. While the Magellan Fund was always considered a growth fund, Lynch's style is certainly one that resembles many other widely known value investors. Lynch, like many other Super Investors seemed to invest in simple easy to understand businesses, ones that seem boring or mundane.

A Lynch Quote: " I'd rather invest in panty hose than in communications satellites, or in motel chains than in fiber optics. The simpler it is, the better I like it".

Who else have we heard say the simpler the better? If you answered Warren Buffet, you are correct.

Lynch was a big proponent in looking all around your own surroundings to find stocks to buy. Almost on every corner in America you see a MacDonald's(MCD) or a Starbucks(SBUX). Every strip mall is anchored by a Target(TGT), WalMart(WMT) or a Best Buy(BBY). What kid or adult does not own a pair of tennis shoes(sneakers) these days, with a high percentage being Nike(NKE). Probably most have drank a Coke(KO) or Pepsi(PEP) and the list goes on. Lynch also observed what his wife and children purchased, these were his in house analysts you might say. He also, oftened looked for companies that had similar and favorable attributes, companies that:

1. sound dull

2. do dull things

3. do something disagreeable

4. do spin off deals

5. are not well followed on Wall Street or have no big institutional investors

6. have negative rumors are all over it

7. are in a depressing business or industry

8. are in a no growth industry

9. the business that has a nitch

10. people keep buying it

11. it uses technology

12. when management and owners are buying the stock.

13. when a company is buying back shares.

Lynch retired at the top of his game but still plays an active roll within the Fidelity Family of mutual funds.

Leucadia National In The Shadows Of Berkshire?

 Leucadia National Corp.(LUK) is a publicly traded diversified holding company with investments ranging from telecoms, medical products, real estate, auto finance, investment banking, timber,mining, plastics, gaming entertainment, energy and  even a couple of wineries. Their current track record goes back almost 30 years with their roots being traced back even farther to the mid 1800's. Leucadia which is run by the duo Ian Cumming and Joseph Steinberg does not come up  in the media as much  as  the well known Berkshire Hathaway(BRKA)(BRKB) run by Warren Buffett. However, over the last 30 years these value players have quietly compounded an impressive track record which ranks highly amongst any peer group. Many of their investments are private companies in which they own a significant stake or the whole company. They currently hold positions in 8 publicly traded companies with the largest being the Jefferies Group(JEF).

Currently LUK  trades at $19.50 per share with a book value of $25.00 per share. Their debt/equity ratio is .38, with revenues slightly over 1 billion. Management currently owns 23% of the shares outstanding while large institutions such as, Fairholme(FAIRX), Morgan Stanley(MS) and others own 66%. At the end of September their net worth or stock holders equity came to $5.7 billion dollars. According to their last annual report they had an opportunity to make a large investment in a real estate, farming and ranching business in Argentina which they will give further details at the end of 2008.

Below is Leucadia National's Track Record For The Last 30 Years:

       Book Value    Equity

        Per Share

                                                                     

1978 ($0.04) (a) ($7,657) (a)
1979 0.11  22,945  
1980 0.12  24,917 
1981 0.14  23,997 
1982 0.36  61,178  
1983 0.43 73,498  
1984 0.74  126,097 
1985 0.83  151,033 
1986 1.27  214,587  
1987 1.12  180,408 
1988 1.28  206,912 
1989 1.64  257,735 
1990 1.97  268,567 
1991 2.65 365,495 
1992 3.69  618,161 
1993 5.43  907,856
1994 5.24  881,815 
1995 6.16  1,111,491 
1996 6.17  1,118,107 
1997 9.73  1,863,531 
1998 9.97  1,853,159 
1999 6.59(b) 1,121,988(b) 
2000 7.26 1,204,241 
2001 7.21 1,195,453 
2002 8.58  1,534,525 
2003 10.05  2,134,161 
2004 10.50  2,258,653 
2005 16.95  3,661,914(c)
2006 18.00  3,893,275 
2007 25.03  5,570,492(d)

                         21.7%  compound return on equity

(a) A negative number cannot be compounded; therefore, we have used 1979.

(b) Reflects a reduction resulting from dividend payments in 1999 totaling $811.9 million or $4.53 per share.

(c) Reflects the recognition of $1,135.1 million of the deferred tax asset or $5.26 per share.

(d) Reflects the recognition of $542.7 million of the deferred tax asset or $2.44 per share.

(Dollars in thousands, except per share amounts)

* All information is believed to be reliable but as usual you need to do further research

Investment Dont's

I was flipping through the pages of a book "The Money Masters" I have in my personnel library(books piled in a brown  box, lol). The book was published in 1980 and was written by John Train.

It covers the strategies of 9 great investors Warren Buffett,Paul Cabot, Phil Fisher,Ben Graham,Stanley Kroll,T.Rowe Price,John Templeton,Larry Tisch and Robert Wilson. Perhaps some of you have already read it, if not Amazon(AMZN) sells the second addition printed in 1994. While each chapter is focused on one of these individuals and their investment strategies, I found Chapter 11 unique. This chapter contains techniques that The Money Masters agree don't work.  *Here is a brief passage from the book.

Investment Dont's

1. Avoid Popular Stocks or Glamour Stocks- a glamour stock is a good company overpriced because it's everybody's darling at the time. 

2. Avoid Fad Industries- Fads and Brokers ' stories are variations on popular stocks. The ones you can remember are limited only by how old you are: computer stocks of the 60's, bio tech  of the early 90's , Internet stocks of the late 90's and most recently energy companies.

3. Avoid New Ventures- Venture capital is for the pro's, not passive portfolio investors.  Out of the Microsoft's(MSFT), Dell(DELL), Cisco's(CSCO) and WalMart's(WMT) many of thousands go bust. The ones that make money here are the promoters and upper management.

4. Avoid "Official" Growth Stocks- Stocks that have the growth label on their back and the price tag to go along with it.  For example these stocks might have been the big gainers in the last cycle, but going forward they cannot sustain their growth.

5. Avoid Heavy Bluechips- While we here the term Bluechips alot this is usually a name for a dividend paying company that was once good . Many are in cyclical industries and have eratic earnings. 

6. Avoid Gimmicks- Gimmicky investment "products" with high transaction costs and no intrinsic growth of value, such as derivatives, this is plain a*s gambling. Take my advice go to vegas if you want to gamble, lots of glitz and they give you free drinks.

7. Bonds Don't Preserve Capital- A final bad deal for the investor, usually is bonds, unless they reinvest all the income. Many think that bonds are "conservative" this is highly exaggerated. After tax, bonds generally yield less than inflation. If you use the interest you will probably run through your capital base in 20 years.

8. Forget About Technical Analysis- These are companies or individuals that try to predict which way the stock is heading and when it will get their. Hey they might tell you where the stocks been but they can't tell you where it will be in one week or one year.

I thought this was unique because mostly what we read or here is "this is what you should do" or "this is the way I did it".

Omaha Oracle Taps a Medium on Wall Street(circa1999)

Omaha Oracle Taps a Medium on Wall Street

Thought this was an interesting article taken from the NY TIMES January 31st 1999, almost 10 years ago . Look at where Berkshire was trading at then, $65,000 a share, 2 months later it was trading at $73,000 a share. Whats really interesting is that its book value back then was $37,000 a share, which was close to 2x book value. Today it trades at book value which is $77,500 a share. 

anyones thoughts?

Bill Gates The Value Investor

It looks like Bill Gates  co-founder of Microsoft is also a value player. Gates controls a holding company named Cascade Investments which has been around for 14 years.  Currently Cascade Investments holds a diverse basket of 18 stocks. These businesses range from a railroad to a soft drink bottling company. It certainly looks like Cascade Investments is modeled in some ways like Warren Buffetts Berkshire Hathaway(BRKA,BRKB) excluding the insurance companies. In a recent 13F filing Gates added to his position in Republic Services(RSG) upping his stake to nearly 20% of the company. Republic Services is one of the United States leading waste providers. The largest holding in the portfolio is Canadian National Railway(CNI) which Gates owns about 7% of the common shares. He also upped his stake in Fomento Economico Mexicano,SAB de SV(FMX) which produces, markets, and distributes Coca-Cola trademark beverages as well as SOL Beer. He now holds 5.9% of the common shares of Fomento. His newest holdings which are rather small purchases include AutoNation(AN), Patriot Coal(PCX) and Strategic Hotels &Resorts(BEE).  Interesting to note is that Buffett and Gates own some significant stakes in the rails. It also looks like Gates took a page out of Peter Lynch's One Up On Wall Street and invested in a boring and disgusting business that being Republic Services. Whats next for the King of Software?

Relevent Articles

What Bill Gates Is Holding

Gates Finds Value For His Foundation And His Personal Portfolio

STOCKMANMARC

Stocks fall after jobless claims jump: Financial News - Yahoo! Finance

Stocks fall after jobless claims jump: Financial News - Yahoo! Finance

Sir John Templeton And The Basket Approach?

Many of you value investors out their already know or have heard of John Templeton, but for those of you that have not here is a brief bio: JT grew up with little money  in Winchester Tennessee during the Great Depression. He later founded Templeton Mutual Funds which was later sold/merged with Franklin Funds to create what is now one of the largest Mutual Fund companies there is. However long before this when JT was a young man coming out of the Depression circa 1939, JT called up his stock broker and had the broker buy $100 worth of every single stock that was selling for no more than $1, on both New York & American Stock Exchange.  The broker bought every stock except the ones that were bankrupt, but JT was adamant about buying those as well. You see what I am getting at is that JT was a buyer of stocks during a time when the Whole World was in crisis. He rationalized that stocks in general were so battered  that he did not have to hand pick or study each company but to buy a basket of stocks instead. He new that this so called basket approach would produce some dogs as well as some big winners. It was the latter of course that put him on the wealth track. When stocks as a whole are driven down below their historic averages you don't have to be a professional stock picker to make some above average returns. This was not a get rich quick act, he held these stocks an average of 4 years which gives the bargain stock enough time to be recognized by the market and bid back up to fair value. 

I am not encouraging everyone to suddenly run out and by a basket of beaten down stocks, but merely making a point that when they  are trading at very low valuations that this signals a buying opportunity or very good look.

The Great Investors whom Templeton was one of  are usually buying when you are selling.....

STOCKMANMARC

Sears Holdings, ESL Investments & Mr. Eddie Lampert

This is a follow up on my previous article on Sears Holdings (see my post "Sears Not Just Your Average Retailer!?$$$"http://stockmanmarc.blogspot.com/2008/10/sears-not-just-your-average-retailer.html) which I covered just a few weeks ago. The stock has gone down another 20% since then which is probably in anticipation of earnings that are due out on Dec. 2nd, 2008. However the intrinsic value of the company still looks to be around $81.00 per share and this does not include the Craftsman, Kennmore, or DieHard brands which most Americans are familiar with. Due understand that the estimates in value are rough estimates but conservative ones at that. Since I last posted on Sears, they have since reinstated the layaway plan which use to be quite popular many years ago. It was always very popular around the holidays. For those of you not familiar with the layaway plan, you simply put down a small down payment and the retailer holds that item until the product is payed for.

Many people are strictly looking at this company as a pure retailer, and saying that they don't have a chance against WalMart(WMT) and Target(TGT). However Sears sits on a vast amount of real estate that could be sold off or converted into a different type of store, the possibilities are many. Plus they have cash on hand to redeploy or buy back shares that have been beaten down which further increases shareholder value. Furthermore their debt/equity ratio currently is .38 which is much lower than the competition. Also remember that Eddie Lampert is not only chairman of a retail giant but a chairman of ESL Investments who has a 20+ year track record.

This is an interesting stock and situation, which I will try to follow up on at a later date.

Please remember this is not a recommendation but a business to keep an eye on and do further research.

the Dhandho Investor: Mohnish Pabrai

For those of you that are not familiar with Mohnish Pabrai, he is a devout disciple on the teachings by Warren Buffett and Ben Graham. Mohnish runs a fund identical to Warren Buffett's original Buffett Partnership which was the predecessor of Berkshire Hathaway(BRKA,BRKB). Pabrai wrote a book about a year ago titled the Dhandho Investor. The word Dhandho which is pronounced dhun-doe is a Gujarati(a state in India) word. Dhan comes from the Sanskrit root word Dhana meaning wealth. Dhan-dho, literally translated, means "endeavors to create wealth".

Pabrai is a focus investor usually holding about 12-18 stocks in his portfolio. Pabrai likes to put no more than about 10% in each stock. Currently Pabrai holds about 16 stocks in his portfolio with about 320 million under management. Fairfax Financial(FFH), Harvest Natural(HNR), and Sears Holdings(SHLD) represent his 3 top holdings. The current 13F filings show that Pabrai increased his holdings by 52% in Wellcare(WCG) while selling most of his position in Jackson Hewitt(JTX).
For those of you that have not read the Dhandho Investor, you should, it is simple to understand and makes a lot of sense.

A Cash Rich Insurer: Odyssey Re

Odyssey Re (ORH) is a leading reinsurance underwriter that provides property and casualty insurance as well as specialty insurance. Odysseys biggest shareholder is Fairfax Financial which I talked about in a previous post. Fairfax holds 66% of the outstanding common shares. Currently ORH has a market cap of 2.5 billion and its revenues are 3.2 billion. Total cash on hand is 2.5 billion, which means it only trades for 1 x cash. Very little debt with a debt/equity ratio of .18. ORH sports a 27% REO(return on equity). They pay a small dividend which yields .70% which was recently raised. With so much in cash and backing from Fairfax, Odyssey looks to be in a strong position to weather out the current financial crisis.



Author does not hold any position.

KISS?

I am not talking about the kiss you got from your spouse/girlfriend/boyfriend last night. Nope, I'm not talking about the rock band named KISS either. I'm talking about the acronym KISS(Keep It Simple Stupid). But for most of us we can't. We want to make investing difficult. At least this is what most of us as humans do. We think there is some secret formula to investing. Maybe if we stare at enough charts or pay our brokers enough we will find the next super stock like Dell Computer(DELL) , Apple Computer(AAPL) or Walmart(WMT). The bold truth, is that their is no secret! If their was a secret it would be "buy low and sell high", now isn't that simple. Investing is all about keeping it simple. Most all of us, have the knowledge already. All you really need is a little common sense and some patience. I'm not saying everyone can be the next Warren Buffet, however one can expect to make a return as good or a little bit better than the averages. Most investors get into trouble over analysing the market, and then there are others who simply get frightened out of the market. So the next time you ponder on what stock or mutual fund to buy, think of KISS and I'm sure with some patience and some common sense you can pave the way to a brighter financial future.

Has Your IRA Turned Into A IRL?

Has your IRA(individual retirement account) turned into a IRL(individual retirement loss). Well you are not alone. Just about everyone that owns a stock or mutual fund is suffering. With markets getting taken down to new lows day by day whats a investor to do. First take a deep breath, don't panic it's not the end of the world.However many people would like you to think it is. Even if it was you would not need the money where your going, unless the MASTER CREATOR takes worthless stock certificates. Remember folks an IRA is for your retirement and it is a long term commitment, although many people do not practice this. They trade in and out of the markets. When things are going good and the market is sailing on high water everyone is in a good mood. People are in a buying mood, chasing the high prices or high valuations but when the markets go down during low tide everyone is jumping ship and throwing their securities overboard. This is the time to accumulate for the long term, because when good times roll around and they will your ship will be sailing in some mighty rich waters.

Jobless rate bolts to 14-year high of 6.5 percent - Yahoo! News

What Happend To All Those Growth Stocks? Their Now Value Stocks!

Hey do you remember 1999-2000 the peak of the Internet bubble? Chances are if you were in the market you owned tech stocks. Anything related to Internet/net working was going through the roof. These stocks were going to make us all millionaires, ha ha ha. Ten years later and we are scratching our heads, and asking what the heck happened. Many of those higher flyer's went bust, I'm talking about the ones with no earnings and market caps the size of General Electric. These stocks were all fluff(a lot of hype) and no stuff(assets & earnings). You may ask what about the growth companies over the last 10 years, what happened to them. Several of these companies have gone from being labeled growth stocks to value. You see folks they really are synonymous with each other, that is value= growth. Price is what you pay and value is what you get. In other words many of these growth stocks are value stocks. Does that mean they have stopped growing, hardly so. This just means these stocks are a much better deal than 6 mos, 12mos, or even 5 years ago. Here are four stocks that are still growth stories that trade at very reasonable values. All four stocks have P/E's less than 15, PEG ratio's under 1, almost no debt, cash in the bank, and all have ROE ratio's above 26%. Furthermore all four have a large amount of insider ownership which means management is on board with the share holders. To boot three out of the four pay a dividend.

Buckle(BKE) priced at $24.89 per share is a retailer of casual apparel for young men and women.

Factset Research Systems(FDS) priced at $36.15 per share provides financial information and data to the investment community worldwide.

Garmin(GRMN) priced at $20.24 per share designs, and manufactures global positioning systems.

Hansen Natural(HANS) priced at $23.01 per share develops and sales sodas, fruit juices energy sport drinks and smoothies offering brands, such as Monster Energy, Lost Energy, and Blue Sky.


* These are not recommendations but ideas to further pursue.
* Author is long HANS.

STOCKMANMARC

Where Do I Put My Money???

With the stock market going lower and lower every day and foreclosure rates on the rise what are we suppose to do? Everyone is worried, the poor, the middle class and even the rich, Oh Ya I said the rich. You see the Baby boom generation and their children have simply not experienced the situation that we are in. Everyone says its different this time. Yes their right it is different. That is different in our lifetimes, but not if you look back in history. This is like a 100 year flood and the last one that occurred was in the 1930's. Is it that bad? Yes. Will it get worse? That's any ones guess. On a brighter note some of the biggest opportunities have come during recessed or depressed times. For example, Hewlett Packard(HPQ) one the largest computer and technology companies was started during the Great Depression as well as Walt Disney(DIS) and Steak'n Shake(sns). Lets also look at how cheap rates are now. The 10 year treasury yielding roughly 3.5%, Money Markets and CD's paying 3-4.5%. Inflation and taxes are going to eat into these low returns. Where then do you put your money? You guessed it Stocks, Real Estate, or starting your own business. Even Warren Buffet said he is a buyer of stocks right now. Why invest in the government, which is what you are doing when you buy treasury's. Put it in to free enterprise, which is common stocks (companies), land and ones own business.

Your Thoughts?

STOCKMANMARC

Stock Analysis on a small cap: Horsehead Holdings Corp.(ZINC)

Horsehead Holding Corp. (ZINC) is the largest zinc producer in the United States and the leading manufacturer of value-added zinc products including zinc oxide and zinc powder. They have been a technological leader and innovator in the zinc industry for more than a 150 years. They are also the world's largest recyclers of zinc-bearing materials. Zinc is used in brake linings for auto's, batteries, the white pigment in paints, the rubber industry, and as an opaque sunscreen.

Horsehead(ZINC) is currently trading at $3.00 per share with a NCAV(net current asset value) of $4.35 per share. The property and equipment is valued at $3.15 per share. ZINC has almost nil in long term debt plus $2.00 in cash per share, with a book value of $7.65 per share. The trailing 12 month REO(return on equity) is 33%. The stock is trading lower simply on the slowing economy, like everything else. Earnings for the trailing twelve months were 1.88 per share and they are expected to be flat next year. The stock traded as high as $23.51 within the last year. This is a cyclical company and it is trading at 69% of its NCAV. At current prices this looks cheap!

Further research is recommended.
Author does not currently hold any position.

U.S. layoffs reach five-year high - UPI.com

In layoff announcements, the financial sector topped the list...

Buffett Likes Those Quarterly Cash Payments

The Oracle of Omaha Warren Buffet has probably been in the news more in the last couple years than his first 50 years of his business career. One reason is that he is one of the richest people in the world second he has made his fortune strictly off of investing and third he is at the twilight of his career. But the reason for this article was to touch upon his investing style, and what he looks for in order for him to invest or buy the complete company. I will not get into the details with this post, but I do want to bring up a point, which is Warren Buffett- The Ultimate Dividend Investor(see dividendgrowthinvestor.com, a good article) has transformed as an investor over his long career. Yes Warren Buffett still very much adheres to the rules that Ben Graham wrote nearly 75 years ago which were Margin of Safety and Mr. Market. I do believe he is the ultimate dividend investor. Many of his public companies are dividend paying ones, plus the companies that are wholly owned subsidiaries send profits back Berkshire Hathaways(BRKA, BRKB) bottom line, much like the float of his insurance companies do. Buffets Berkshire(BRKA, BRKB) has been forced to change just out of its shear size. However I do believe in his personnel portfolio he still looks for 50 cent $1 bills. This is just my personnel observance while reading many books and articles that have been written on him.





This article intends to point out that he has gravitated to investing in large, cash paying companies rather than his early years which were Ben Grahams, cigar butt style of investing.

Buffett...Berkowitz...Lampert...Pabrai... And Focus Investing

What is Focus Investing? Does it mean staring at your stocks so long that you become cross eyed. No! Focus Investing is a style that has been around for many many years but it is not talked about much in the mainstream, only in value circles do you hear it mentioned. Its concentrating your bets, putting a large amount of your investment dollars or portfolio into your best ideas. Investors Mohnish Pabrai, Bruce Berkowitz, Eddie Lampert, and Warren Buffett have practiced this style, along with many other notable investors. The first three mentioned, Pabrai, Berkowitz, and Lampert practice this method very much today. For example, Eddie Lampert has 50% of his ESL Investments in Sears Holdings(SHLD) and another 20% in Autozone(AZO). Buffet however over the years has become more diversified owning roughly 90 public and private companies, not necessarily by choice but by the growth and success he's had. Both Pabrai (The Dhando Investor) and Joel Greenblatt (You Can Be A Stock Market Genius) mention focus investing in their books. Focus Investing also has to do with position sizing and what percentage you should allocate to each security, 5% 15% 25% or greater. This all depends on ones risk tolerance, and your expectations for upside(downside) potential. Pabrai has stated that ideally he favors putting no more than 10% of his total holdings in one individual security and only buying about 10-15 stocks. Here again this has to do with ones own personal risk level.
If you study many of the master stock pickers over the last 60 years you will see that they have used or use Focus Investing out performing the indexes.

Your comments or thoughts...

The Dow and S&P Finish Positive For The Week!!!

It was a first in sometime that we ended up for the week. While the market has gotten pummeled over the last few weeks we had a nice lift going into the weekend. While the markets have bounced around vigorously this has given way for much opportunity. While the markets could go lower remember to stay focused on the long term. No one can pick bottoms or tops that's why it is important to stay invested.

Enjoy the weekend folks and Happy Halloween

Cheers!

A Few More Ben Graham Nuggets

• These stocks come very close to meeting Ben Grahams criteria:
  
  All issues mentioned have a current ratio better than 1.5, a book value under 1.5, a p/e ratio under 15, positive eps growth over last 5 years, very low or no debt, and pay a dividend. 8 out of 10 companies have earned money for last 10 years straight while 2 companies have been positive for at least 8 of those 10.
  
  Abercrombie (ANF)- A specialty retailer catering towards the younger crowd. This one surprised me to be on this list. Has a high ROE that has averaged over 30+ % for last 10 years.
  
  Ashland Inc.(ASH)- A well run diversified chemical company trading at a sales ratio of .17 and 43% of book value.
  
  Bel Fuse(BELFB)- Manufacturers electronic components trading at 2x cash.
  
  Movado(MOV)- Another retailer that manufacturers and markets fine watches and jewelry.
  
  Nam Thai Electronics(NTE)- Electronics company that has increased cash flow over last 6 years straight. Value investors the Kahn Brothers (Irving Kahn served as teaching assistant to Ben Graham in the 1930's) have stake in company.
  
  Seaboard(SEB)- Insiders own 72% as well as the Kahn Brothers.
  
  Thor Industries(THO)- The largest manufacturer of recreation vehicles and a major builder of small buses. Insiders own 36%.
  
  
  These are not recomendations but ideas to further study before investing
  
  STOCKMANMARC

Last Minute Reversal In The Dow!

The Dow Jones Industrial Average had a change of heart reversing nearly 400 points in the last several minutes of trading finishing at 8990.96 down 74 points for the day. Just 2 hours after the Fed cut rates by a half a point. The rate cut was already factored in. Then what spooked the market in the last few minutes of trading? Many traders on the floor of the NYSE think that it was comments coming from GE's CEO Jeff Imelt However after yesterdays run up of 10% it could be bigger players unloading some positions. Who knows? One thing is for sure the market seems to have a lot of elasticity to it lately.

YAHOO! HAS PRIME REAL ESTATE!!!

That's right Yahoo! (YHOO)has prime real estate, no not sky scrapers or waterfront properties but Internet real estate presence. They rank #1 and #2 respectively for Top Global and U.S. sights. Yahoo's finance page called "finance.yahoo.com" is also the most visited site in investing.
You would think with all their Internet presence they would be trading much higher, but like the market in general they are trading well off their highs. So what is this Internet behemoth worth anyway? Earlier in the year Microsoft(MSFT) made a bid of $33 per share which Mr. Jerry Yang Yahoo's Co-Founder and current CEO turned down. Yahoo is currently trading at $11.50 per share. In 1998 Yahoo's sales were 203 million with a book value of 38 cents per share and 435 million in cash with a stock price of $16.35 per share. Today in 2008 Yahoo does over 7 billion in sales with a book value of $8.33 per share and 3.6 billion in cash with a stock price of $11.50 per share. Book value has increased over 2000% since 1998 while revenues have increased over 35 fold. With its stock trading at 7x cash flow and 10x free cash flow it wouldn't be to surprising to see Microsoft or another suitor to come back into play. Shareholder activist Carl Icahn has a vested interest while management still has 20% itself. Even if no takeover or merger materializes these shares still look under valued. With 3.6 billion in cash Yahoo might do a little hunting itself and acquire some smaller players on the Internet landscape.


STOCKMANMARC

Author currently long MSFT, no positions in YHOO

SEARS NOT JUST YOUR AVERAGE RETAILER!?$$$

Many people think of Sears(SHLD)as that old line retailer who had those big thick catalogues that came out every year that offered a zillion items inside its pages. Those days have been replaced by the internet + other big box retailers such as Walmart and Target. What many people including investors don't realize that underneath this stodgy retailer breathe a different animal. Sure Sears is still a retailer with stores everywhere. But it is not just any retailer. Sears is comprised of Sears, K-Mart and Sears Canada(70% owned subsidiary). Sears is the leading home appliance retailer as well as a leader in tools, lawn and garden, home electronics , automotive repair and maintenance. Their main brands are Kennmore, Craftsman, and DieHard. They also have several different lines of apparel such as Lands' End, Jaclyn Smith and Joe Boxer, they also offer Apostrophe, Covington Brands and Martha Stewart Everyday products. Sears is the nations largest provider of home services, with more than 13 million service calls made annually. ESL Investments Inc a privately owned hedge fund run by famous value investor Eddie Lampert is the man running the show. Lampert has a 20 year track record of 20% annually. Besides being Sears Holdings largest shareholder he has sizable stakes in AutoZone(AZO), AutoNation(AN), Home Depot(HD), and Citigroup(C). Sears is ranked number eight in the U.S. for internet retail sales. Currently Sears trades at .60 book value (48.50 per share/ 80.80 book value per share). The company made 49 billion over last 12 months with a market cap of 6 billion. The company has 1.5 billion in cash with a low debt/equity ratio compared to its pier group. The company has been buying back shares in the open market which should further strenghten shareholder value. Lastly Sears sits on a huge real estate portfolio that is valued at $50 per share to over $100 per share.
Cash = 1.5 bil
Real Estate = 6 bil + (low estimate)
Lands'End = 1.5 bil +
Service Call Unit = 1.3 bil (13mil service calls a year @ $100 per call) low estimate

Total = 10.3 bil/126.4 mil shares = $81.50 per share

These figures do not include the values of the Kennmore, Craftsman, and DieHard brands that could be sold off or sold through different chains like Home Depot, Walmart, Target and AutoZone or different distribution channels which would increase revenue and put a much higher value on the company.

The author suggest further research before investing.

STOCKMANMARC

Fairfax Financial Holdings Looking Cheap!

I recently wrote an article that mentioned Fairfax Financial(FFH). Fairfax is an insurance holding company run in the same fashion as Warren Buffet's Berkshire Hathaway. They take the float from the insurance business and re-invest it in common stock, bonds, or whole companies. Fairfax is run by Prem Watsa who is looked upon as the Warren Buffet of Canada. Fairfax has sold off with the market in general reaching a high of $355 a share. Currently Fairfax is trading at book value of $252 a share with a market cap of 4.7 billion and sales near 8 billion. With over 6 billion in cash (which represents $333 per share) and a debt-to-equity ratio of only .35 this company is looking quite attractive. They have a high REO(return on equity) of 37% with a trailing P/E of 3.25 and pays 1.9% dividend. To boot they have a stock portfolio worth 3 billion.

The author suggest further research before investing.
The author is long FHH.

STOCKMANMARC

Missed Opportunity? and The Intelligent Investor

Stocks ended lower for the week with a global sell off. Once again the herd ran for the doors not wanting anything to do with stocks. Fear has set in and no telling when good times will return. But for the intelligent investor these are good times. This is when that simple saying comes into play "Buy Low and Sell High". Are we even at the low, who knows? Stocks have been routed across the board. Will we go lower??? Next week will show more of the puzzle.

The intelligent investor views this mess, crisis, or recession as an opportunity to by good companies at a good price. Where many investors are selling out, waiting for the storm to subside. I have got news for you, when the storm settles, chances are the market will be higher,then it will be to late.I hear plenty of people say I'll wait until we turn back up before jumping back end. That's when you miss the chance of making the big returns that Warren Buffet, Eddie Lampert, and Marty Whitman have made for themselves and their shareholders for years.

Your thoughts?


STOCKMANMARC

9 Ways to Make Money - Kiplinger.com

9 Ways to Make Money - Kiplinger.com

Thought this was an interesting article!

These 3 Stocks Have A Medicinal Touch

Another hedge for uncertain times is the health care industry. The industry has been beaten down with the rest of the market . Many of these companies are trading at low p/e multiples well below their norm. Three that come to mind are Sanofi-Aventis(SNY), Pfizer(PFE), and Merck(MRK). All three
are trading at p/e's under 13 with debt/equity ratio's under .25 and all sport dividends around 5% or better with Pfizer having a 7.5 % yield. You also have some added support by big name value investors buying in. Warren Buffets Berkshire Hathaway has bought into SNY and Bruce Berkowitzs Fairholme Capital has about 10% of their fund invested. Plus all three have growing free cash flow.

A 401K Issue

I have been ask the question several times recently, "Should I decrease the amount that I put into my 401k every month. Heck NO!!! Unless you need the money to live on, this is not a good move. Why? Number #1 this is money you are saving for retirement which means long term!#2 you are buying at a lower price now than you were a 1 month ago, 1 year ago, and probably 5 years ago. This means you are accumulating more shares at a lower price. #3 this money is tax deferred. and #4 your employer is probably matching your contributions up to a certain percentage which is like FREE money. In fact if you are not contributing the full 15% allowed you should consider bumping it up to the maximum allowed.Stay invested folks and stay the course.

STOCKMANMARC

Buy American, Buffett Says. He Is. - Mergers, Acquisitions, Venture Capital, Hedge Funds -- DealBook - New York Times

Buy American, Buffett Says. He Is. - Mergers, Acquisitions, Venture Capital, Hedge Funds -- DealBook - New York Times

Warren Buffett has stated that investing is much like hitting is in baseball, you step up to the plate and you get 3 strikes before you are out. However the difference is we as investors can wait as long as we want before swinging at the pitch. The pitches are much sweeter than they were 1 year, 2 years and maybe even 25 years ago. Many investors have been stung pretty bad not ever witnessing a market as the one we are in today. But now is when that pitcher is throwing allot of lob balls and is giving us a chance to knock it out of the park. I do not know where the bottom in this market is and when it will end but being an old ballplayer the bat is not sitting idle on these shoulders nor the GREATEST INVESTOR OF ALL TIME WARREN BUFFETT.

check out the link above

STOCKMANMARC

Dow Jones Industrial Average (1900 - Present Monthly) - StockCharts.com

Dow Jones Industrial Average (1900 - Present Monthly) - StockCharts.com

I thought this was interesting, a graph of the Dow Jones Industrial Average over the last 100+ years. As you can see the market continues to climb upwards while stumbling every so often. Only one decade during this period had a negative return (-49%) and that was the 1930's known as "The Great Depression". However from a low of 41.22 in 1932 to a high of 194.4 in 1937 the DOW ran 371%. That's why it is important staying invested for the long haul and not trying to time the market. Is this decade turning into a decade similar to the 1930's or possibly 1970's where we went sideways for a decade with a total return of 5%, who knows? So far we are down for the decade but I suspect over the next 10 to 20 years we will see that graph higher.

Your Thoughts

STOCKMANMARC