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.