Finding Value

Warren Buffett said it and it's true. Different people can apply the value approach and apply it correctly --  and have completely different investments.

You've read me say more than once that I enjoy Clyde Milton's Cheap Stocks blog. I really like Clyde's theme of buying bargain stocks with undervalued real estate holdings.

And in his latest Financial Times column, James Altucher finds an area with few investors: closed-end funds:

Closed-end funds are publicly traded mutual funds that trade on the major exchanges, usually the NYSE or the Amex. Because they are publicly traded, the price of a closed-end fund is set by the market. Even if a CEF has $100 a share in assets, the price might be only $95 or $90 or even $105 depending on the public’s attitude towards the sector the CEF is in, the management running the CEF and a variety of other factors. Often, because CEFs are not as sexy as owning Google or even as sexy as owning Alcoa, the discount to net asset value that a CEF usually trades at can be explained by nothing more than ennui.

He goes on to explain more about closed-end funds and then ends with this:

We are going through a cataclysmic change now in asset allocation as funds of funds, mutual funds, hedge funds and money management firms are all trying to converge on the same business model with little hope of convincing their customers they have an edge. In an environment like this, sometimes the best approach is to lay low and pick up the scraps of healthy food that the drunken partygoers have thrown into the garbage.