Update On Thor Industries

Thor Industries $THO is the world's largest manufacturer of recreation vehicles and a major builder of commercial buses. I first mentioned Thor back in January 2009 when it was trading at $13.50 per share. The stock was used as an example of a company that the seasoned value investor Walter Schloss might pick if he were still picking stocks on a professional basis. Schoss had a very impressive track record during his years managing money. He was also a part of Ben Graham's alumni. The stock has had an impressive run this year. I believe the stock price has gotten a little ahead of itself. They just announced today that they were making a special one time payout of 50 cents per share on their dividend. This is in addition to their quarterly payout of 7 cents per share. This is probably why the stock price ran up today. 10 months ago this stock traded at around 1X book value, where as now it trades for 2.3 book. Management still holds a big stake in this company at 39%, which is a plus, and aligns them with shareholders. The company still has a nice cash cushion of over 328 million with NO debt and free cash flow. All good looking figures for any value investor on the lookout for a new business to allocate money in. In fact Warren Buffett bought a similar business Forest River back in 2005, it to had NO debt. It would not suprize me if Buffett or another company would come in and buy this company outright. While I still feel that this is a very well managed company and things are looking up, the margin of safety is not where it was 10 months ago. *Author does not currently have position in $THO

Posted via email from stockmanmarc's posterous

The Many Facets of A Value Investor

What defines a value investor? Many think that value investing is about picking stocks with low PE ratios or stocks trading under book value. While this is certainly true it is only a small part of the equation. It has been 75 years since Benjamin Graham and David Dodd published their book Security Analysis which was in a time of economic uncertainty, much like, what we are experiencing today. I think any Great or even good investor is a value investor. A value investor can come in different make up. For example, Warren Buffett who is considered by many the best investor of all time, chooses his companies differently than say his contemporary Walter Schloss would. Schloss worked and studied under Ben Graham in the 1950's. Both use the same set of principles that were laid out by Graham, but if you study or listen to these men, these valuing techniques may vary. One reason for these varying in techniques, is Berkshire Hathaway's (Buffett's Holding company), shear size. You won't find many of Buffett's companies trading at Graham prices. Nowadays you here Buffett talk about businesses with economic moats. A good example might be Coca Cola $KO or Burlington Northern Railway $BNI. A economic moat is a business that may have a good brand or name recognition, pricing power or trademarks making it more difficult for rivals to compete effectively. Buffett also searches for companies with plenty of free cash flow. Where as Schloss stuck mainly to Grahams original set of principles, looking for cheap stocks trading at or near NCAV. Another investor who has applied these techniques but also added to the screening process is Joel Greenblatt. Greenblatt uses many of Grahams techniques but applied the Earnings Yield. The earnings yield is a inverted PE ratio. Many value investors take large stakes in companies (controlled or focus investing) which gives them an edge. This allows them to have more influence on day-to- day operations. We have witnessed this through Eddie Lampert's investment in Sears Holdings $SHLD or more recently Sardar Biglari's stake in Steak n Shake $SNS.

Some (Value)Investor Terminology

• low PE ratio
  
• dividend yield
  
• earnings yield
  
• low debt-to-equity ratio
  
• free cash flow
  
• managements stake
  
• earnings growth
  
• NCAV or Net-Nets
  
• assets/liabilities
  
• current ratio
  
• economic moats
  
• intrinsic value
  
• margin of safety
  
• book value
• controlled investing
• return on equity

Relevant Articles

Buffet...Berkowitz...Lampert...Pabrai and Focus Investing

Has Value Investing Worked To Protect The Downside

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