Saturday, January 3, 2009

A Stock Candidate That Walter Schloss Might Like!




I'm sure many value oriented investors by now are familiar with Mr. Walter Schloss, but for those who are not I will give a quick Bio. Walter started out as a runner on Wall Street back in the 1930's, later he went to work for Benjamin Graham in the Graham-Newman Partnership. By the mid 1950's Schloss left Graham to start his own investment company/partnership. He operated his firm in much the same way as Graham and that other famous student/employee of Graham's Wa
rren Buffet. Over the next 48 years Schloss averaged 15.3% compounded returns .

He had no connections or access to useful information. Practically no one in Wall Street knows him and he is not fed any ideas. He looks up the numbers in the manuals and sends for the annual reports, and that's about it. Adam Smiths Supermoney (1972)

Warren Buffett- famously dubbed Schloss a "superinvestor" is still picking unloved stocks.


Stockmanmarc- Real Pure Value Player

The market will always offer up some undervalued certain securities, but the best time to look for them is when there's panic and fear on Wall Street, Schloss often said. Buffett often quotes the same. Great minds think alike.

Schloss like to used the KISS method.

SCHLOSS WILL FOCUS ON:
  • Stocks with little or NO debt.
  • Stocks with a track record or long history.
  • Stocks selling NEAR or BELOW Book Value.
  • Stocks/Companies with management in place and owing a substantial amout.
  • And Don't loose money.

Here is a company listed below that Schloss or any value investor might take a look at:

Thor Industries (THO) was founded in 1980 and have grown to be the largest manufacturer of Recreation Vehicles (“RVs”) and a major manufacturer of commercial buses in North America. Their market share in the travel trailer and fifth wheel segment of the industry (towables), is approximately 30%. In the motorized segment of the industry they have a market share of approximately 16%. Their market share in small and mid-size buses is approximately 37%. Thor also manufactures and sells 40-foot buses at their facility in Southern California designed for that product as well as their existing 30-foot and 35-foot buses.They rely on internally generated cash flows from operations to finance their growth although they may borrow to make an acquisition if they believe the incremental cash flows will provide for rapid payback. They have invested significant capital to modernize, improve and expand their plant facilities and expended $14,815 for that purpose in fiscal year 2008. Currently Thor Industries (THO) trades slightly above book value, while sporting a very low price to sales multiple of .32. Thor has zero debt and management has very valued interest. Management has maintained a very steady free cash flow for the last ten years, however it has tapered off over the last year but has maintained positive.

By the numbers:
  • $178mil cash/NO Debt
  • 29 year company history
  • trading at just above book value
  • insiders hold 46% shares
  • trading at 5 x EV/EBITDA
  • current ratio is 2.3
  • price/sales ratio of .32

* With the current state of the economy Thor could suffer further down side however with their longterm record and a close eye on their bottom line Thor deserves a further look.

* Author is currently long THO

4 comments:

  1. That's a very good article. Thanks a lot for posting!

    ReplyDelete
  2. thanks for sharing.

    ReplyDelete