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« January 2006 | Main | March 2006 »

February 28, 2006

DirecTV Headed in Right Direction

By right direction, I mean the company's stock price. Not the company itself.

Indeed, I think DirecTV Group (DTV/NYSE) being controlled by Rupert Murdoch is a great thing (in contrast to my less-than-effusive endorsement yesterday over the speculation that he could buy the Financial Times). Murdoch might have a record of dumbing down newspapers, but his people know how to run satellite companies.

And maybe the market is starting to see that.

I notice that DirecTV is trading north of my $15.50 entry price of last July 21. It could always drift back down, of course, leaving my stake underwater again. (I added to my stake three times, in August, October, and November.) But recall that there were two factors hampering the company's prospects with Wall Street.

First is the fact that the company basically subsidizes subscribers for their first year. This gave the impression that the company had little free cash flow. But DirecTV announced 2005 results last month that beat analyst expectations and at the same time announced a $3 billion stock repurchase plan to be spread out over two years.

The second factor hampering DirecTV's stock performance has been the "overhang" of shares held in the General Motors pension plan. GM holds roughly 215 million DirecTV shares. But yesterday DirecTV announced plans to buy 100 million of those shares from GM for $15.50 each in a deal scheduled to close on Friday.

That's a positive and more than half of the $3 billion in projected stock repurchases.

To be sure, there are still perception problems to overcome. Management needs to prove that "churn" won't be a problem. And there's still another 115 shares being held by GM. And, needless to say, nothing goes straight up.

DirecTV has been in the portfolio for less than a year and this is a long-term investing portfolio. So we're still in early innings with this pick.

Let's stay tuned.

BreakingViews Eyeballs 3i

I posted last week about portfolio holding 3i Group PLC (III/LN) reportedly rejecting a buyout offer from a European rival. The editors at BreakingViews looked at this over the weekend in The Sunday Telegraph (scroll down):

Private equity groups are used to instilling terror in company boardrooms. Now it seems the tables have been turned. Last week 3i was reported to have rejected an approach at £10 a share - worth £6bn - from a rival private equity group. It's easy to see why private equity might be interested. In the past few years chief executive Philip Yea has transformed a business that had run into trouble in the dotcom bubble.

The editors correctly state that Yea has “tidied” the portfolio and expanded into Europe. It should be added that 3i has a competitive advantage because the firm focuses on small-to-medium sized deals, while most of the competition seeks larger transactions. The BreakingViews article also points out that Yea has formed a talented team to manage the portfolio:

But there are difficulties in bidding. First, any buyer would need to bring on board the existing management team, since their expertise is vital to realising the value in the portfolio. Second, 3i is structured as an investment trust, which means it might lose some tax benefits if it changed its status.

Yet despite these two factors, the mystery bidder did not make a low ball offer:

Traditionally, 3i has been valued like an investment trust, trading close to its net asset value - albeit at a 10 to 15 per cent premium to prospective net assets rather than a discount to reflect the higher returns usually achieved in private equity. A bid at £10 a share would be a 35 per cent premium.

But Yea turned the offer down. Why? Because he believes 3i now offers stable returns and deserves to be valued like a bank -- where the net asset premium is a function of the cost of equity and investment returns.

BreakingViews cautions:

Yet even using this technique, you don't get to £10 a share. 3i's cost of equity is about 10 per cent and it delivered returns of just over 12 per cent last year. That implies it should be valued at a 20 per cent premium to net assets - or 890p a share. Yea clearly thinks he can push returns towards his 20 per cent target. If he achieves it, the shares will be worth substantially more. But if he doesn't, investors will be kicking him for not letting them take the cash.

Remember, all this talk of 3i being approached is a news report. And reports can be totally accurate, partially accurate, or downright false. I don't believe this one is false. Yet for all we know Yea and 3i management could be in negotiations right now. Or even fielding other offers. In any event, Yea's leadership has been a HUGE plus for 3i as a company, and he puts the interests of shareholders first. So his judgment on whether or not a buyout offer is best for 3i shareholders should be trusted.

P.S. 3i Group was first mentioned here on May 17, 2005 at $12.73 (adjusted for a 16-for-17 reverse stock split). The shares closed at $16.85 yesterday. That's a gain of more than 32%, and does not include dividends. When reading the original rationale for owning the stock, you'll notice that payouts were an important reason for buying into the company. Regular readers of this site know that 3i has been repurchasing its stock as well.

P.P.S. Note that 3i trades on the London Stock Exchange. I reside in the US so I track my results with the company in US dollars. Because of currency fluctuations, my results may be better or worse than those in British pounds. Ditto for readers in Canada or any other country outside the UK.

February 27, 2006

Not So Pretty in Pink

I first started reading the Financial Times in 1991. A few times a year I had to fly to Kansas City for a client meeting and would pass through Atlanta when changing flights. I'd pick up the pink-colored FT at the Atlanta airport and read it on the plane and in my hotel room.

I was excited to see it because I had heard of the FT a few years before. I'd read that it was the best-written newspaper in the English language. And I found it was. Hands down.

In those days, the paper wasn't on newsstands in Richmond. And I never saw it in other airports I passed through with the exception of New York. Then Barnes & Noble came to town in the next year or so, followed by Borders, and they always stocked the FT. I continued enjoying it throughout the 90s and thought it was superior to even The Wall Street Journal. I still enjoy the FT and feel its weekend section, "Weekend FT," is better than the Journal's weekend edition.

But over the years, my eagerness to read the paper has dropped off. I think a paper should report the news as objectively as possible, yet I still want a paper with a point of view (even if that view is not shared by yours truly). Instead of having a uniquely British point of view, the FT seems to be written from the viewpoint of EU bureaucrats in Brussels. I may be wrong there, but so be it.

I wonder how relevant the publication is to business people in middle England and the former colonies.

Anyway, something isn't right. The paper hasn't been making as much as it should -- and it has even occasionally suffered loses in recent years. And now, as The Independent reported yesterday, Pearson is being pressured to sell the FT.

I don't know what new ownership would mean. And I don't know that Rupert Murdoch buying the paper would be a good thing. By that I mean it probably would be good financially. Yet Murdoch has a reputation for "dumbing down" papers -- my understanding is that he has definitely dumbed down The Times of London. I'd hate to see a tabloid-like virus, however slight, infect the pages of the FT.

But maybe newspapers have to do that stuff to survive now. Either way, things aren't looking too pretty for the "Pink 'un" these days.

P.S. If Murdoch ever launches a FOX Business Channel, the FT could be an excellent provider of content. Much as the same way CNBC uses Dow Jones.

Liberty Media, IAC/InterActiveCorp

This week's excellent Barron's cover story on Barry Diller and IAC/InterActiveCorp included a good amount of stuff of interest to us shareholders of Liberty Media (L/NSYE).

As you get into the article, Barron's gives two potential catalysts that could justify being bullish on IAC. The first is Ask.com, described in the piece as the "scrappy" second-tier search engine.

Then Barron's got around to Liberty Media:

Another potential catalyst is the 21% IAC stake held by John Malone's Liberty Media. Liberty owns super-voting stock, giving it a 53% voting interest in IAC. As part of that arrangement, Malone granted Diller an irrevocable proxy to vote Liberty's shares, while Malone got the right to nominate up to two non-Liberty executives to IAC's board. Diller says Liberty recently proposed a director candidate, whose identity will be disclosed soon.

As it happens, Liberty this month disclosed a plan to divide its assets into two bunches, each with its own tracking stock. One group of assets, dubbed Liberty Capital, will include Malone's cable TV programming assets, like the premium movie channels Starz and Encore, along with a 16% stake in Murdoch's News Corp and a grab-bag of other assets.

The other tracker, to be called Liberty Interactive, includes QVC, the IAC stake, and Provide Commerce, a recently acquired online vendor of flowers, produce and other goods. A spokesman for Liberty says the tracking stocks should be issued to current Liberty Media holders sometime in April. What will that mean for IAC? "For our investors, if anything, it's a potentially positive catalyst," Diller says.

Some investors think the division of Liberty into two tracking stocks could be a prelude to a bigger transaction. Last week, Liberty filed with regulators for permission to increase its stakes in both IAC and Expedia. The Deal, an M&A trade journal, recently speculated that Liberty might sell its stake in News Corp. along with its subscription cable movie channels and use the proceeds to buy the rest of IAC. It wouldn't be surprising to see the issuance of the tracker lead to changes in Liberty's capital structure that could directly affect IAC/InterActive. For one thing, the synergies of joining QVC and HSN seem obvious.

This all is something to keep our eye on. And remember Liberty shareholders, patience is a virtue.

February 25, 2006

Marc Faber Audio Interview

This weekend, Jim Puplava's "Financial Sense Online" features an interview with Marc Faber. The link lets you listen to Faber's current interview with FSO as well as several earlier interviews dating back to 2003.

Anglo-Saxon Capitalism Advances

The rumored buyout offer of 3i Group PLC (III/LN) is just part of a much larger picture. I've posted before of Anglo-Saxon Capitalism slowly taking root around the world. Not just in "emerging markets" but especially Continental Europe.

In fact, the wave of cross-border takeover activity in Europe has become furious, as today's BreakingViews column in The Wall Street Journal Europe points out:

Almost every week another mega transaction is announced: E.On of Germany bids for Endesa, Spain's largest utility; Italy's Enel says it might carve up Suez, one of France's biggest utilities; Mittal Steel goes hostile for Arcelor, the quasi-French steel giant. And so on.

Well, at one level, this can be viewed as a pickup of the mergers cycle -- fueled by cheap debt, strong corporate cash flows and rising business confidence. But we are also witnessing a structural shift. The long-predicted restructuring of European industry on transnational lines is finally happening.

While there have been cross-border takeovers on the Continent before, none were of the "hostile" variety. Governments even had what they deemed "strategic" sectors. The column mentions the French government declaring yogurt one such sector -- that's right, yogurt -- and last year warned off PepsiCo about bidding for French dairy "champion" Danone. Thank goodness, for shareholders and consumers alike, that idiocy seems to be ending:

The first breach came last year when Dutch bank ABN Amro Holding bid for Antonveneta, an Italian bank, against the wishes of Antonio Fazio, then Italy's central bank governor. Mr. Fazio couldn't find legitimate means to block the Dutch. So he resorted to questionable tactics that backfired spectacularly. He was hounded out of office just before Christmas.

The next shock came earlier this year with Mittal's hostile bid for Arcelor, technically a Luxembourg steel group but viewed in Paris as home grown. No law required the bidder to get either government's permission. But previously it was thought that awful consequences would befall anyone who didn't get the official OK. Yet Mittal, a Dutch company run out of London by a very rich Indian, made its offer without even informing the French.

Events have progressed to the point that every industry is up for grabs, including banks, utilities and even airports. Only companies in the defense industry seem off limits.

Yes, backlashes still occur. Yet they get weaker and weaker over time. Most likely because economic reality sets in:

More important, Europe's nation states are finding that they are already inextricably intertwined. How can Spain get huffy about E.On buying Endesa when Spanish companies are acting like latter-day conquistadors throughout Europe? How can France stop a bid for Arcelor when Arcelor itself has just made a hostile takeover of Canada's Dofasco?

It's not just a matter of hypocrisy. Many European companies benefit from going abroad. They don't want nationalistic responses by their governments in the corporate arena to deny them those opportunities. The most telling example is how Paris toned down its opposition to Mittal when it realized the Indian government viewed this as racist, potentially making it harder for President Jacques Chirac to win business for French companies when he visited Delhi several days ago.

As an investor in what I think are undervalued companies, I want MORE possibilities for value realization. Not less. One of the prime ways of seeing value unlocked is takeover activity. So naturally I want MORE takeover activity going on. Not just inside a country or continent. But globally.

The 3i Group report stated that the buyout offer was from a European rival. Former portfolio holding Imagistics International (an American company) was purchased last year by Oce, a Dutch firm.

The more this stuff happens, the greater our chances for profit.

And the BreakingViews column ends on a realistic, though ultimately happy, note:

Not that the friends of free markets should be complacent. The struggle between liberalism and protectionism will never be conclusively won. But, in Europe, the tide is flowing in favor of open frontiers. We may be about to witness the "domino" phase of this takeover boom. To date, the trans-European merger pioneers have been daredevils willing to risk the wrath of governments. Soon their timid rivals will follow.

February 24, 2006

The Prince and the $6 Billion IPO

Bloomberg in the UK reports that Saudi Prince Alwleed bin Talal is looking to raise $6 billion by offering at least 30% of his Kingdom Holding Company:

Through Kingdom Holding, Alwaleed holds a 4.3 percent stake in Citigroup Inc., the world's most profitable bank, as well as shares in more than a dozen businesses including Time Warner Inc. and News Corp. The prince's record as an investor and a Saudi market whose benchmark index surged 134 percent in the past year may stoke demand for the IPO.

"The appetite to be partners with Alwaleed is there,'' said Alfredo Rotemberg, who helps manage $200 million in international investments at OppenheimerFunds Inc. in Beechwood, Ohio. "He's been a good buyer of companies.''

A $6 billion IPO would be equivalent to all the public offerings in Arab countries last year, according to ABQ Zawya Ltd., a business-information service in Dubai, United Arab Emirates. It would dwarf MasterCard Inc.'s planned $2.45 billion sale, currently the biggest IPO set for this year. The Saudi Arabian stock market, the largest emerging equity market, has jumped as record oil revenue fueled investment.

I guess Prince Alwaleed can be viewed as something of a value investor. At least that's the impression I've gotten in press stories over the years. The Bloomberg reports continues:

Alwaleed, a nephew of Saudi King Abdullah, made billions of dollars by buying shares in underperforming, brand-name companies. In 1991, he invested $590 million in Citigroup predecessor Citicorp, which needed cash as it struggled with Latin American loan losses and a collapse in U.S. real-estate prices. Alwaleed, who at the time already owned $207 million of the stock, now holds about $10 billion of Citigroup shares.

I claim no thorough knowledge of the Prince. He seems to go for large cap companies, though that could just be what gets the media attention. Or the size of his fortune makes small cap investing unpractical. Or both.

CBS Reports

As we all know, CBS (CBS/NYSE) reported earnings results as a separate company yesterday for the first time since being spun off from Viacom. This morning's Wall Street Journal has a good piece on the subject by Brooks Barnes.

I notice that WSJ.com now has some different numbers for CBS. I should note that, for what it's worth, WSJ.com gets its numbers from Reuters. It says the company is selling for 0.97 times book value and 0.82 times sales. The market cap is listed as more than $19.45 billion with 772.71 million shares outstanding. The dividend yield is 2.54%.

Does any of this change my view of CBS? No. It's still one of the cheapest large media companies around in a sector that's undervalued in general. Some investment analysts say it deserves to be this cheap, but I like owning undervalued and boring assets. For a few years, anyway. ;-)

In a nutshell, I view CBS as undervalued -- period -- with a top-notch management team committed to shareholders thrown in for free. They've already boosted the dividend by 14% and announced plans to sell the first of what could be several "non core" assets later this year.

I'm staying tuned . . . probably for 3 to 5 years.

February 23, 2006

3i Group Reportedly Rejects Takeover Bid by European Rival

I've said before -- most recently last week -- that if we're right about a company being undervalued it could find itself "in play." The next example of this just might turn out to be 3i Group PLC (III/LN), according to a report in The Times of London. The new caused 3i shares to jump 5.7% in London yesterday.

Scroll down the article and read:

3i Group took on 55.5p to 970.5p, on talk that the investment house last month rejected a £6 billion offer from a European rival. That would be equivalent to about £11 a share. (3i would not comment, as is its policy on such matters.)

Interest in 3i from a private equity peer would be no surprise, given the stock market values the stock at little over net asset value. Equally, it would be no surprise if 3i's new management team of Philip Yea and Simon Ball -- chief executive and finance director respectively -- were keen to reap the benefit of the group's increasingly mature portfolio of investments.

About two-thirds of 3i's current investments are expected to reach maturity within the next three years. This month's stake sales of information group Williams Lea and drugmaker Betapharm will likely be followed next year by flotations of Renta, Vonage and Magix.

This building momentum comes at a time of buoyant equity markets and limited reinvestment opportunities. Many investors therefore see the stock as carrying lower risk than usual. They also foresee a larger proportion of the cash generated by the realisations coming back to them.

Merrill Lynch, viewing 3i as a specialist lender rather than a conventional venture capitalist, has a target price of £10.50 on the stock.


3i Group was first recommended on this blog on May 17. You can read the original rationale for owning the shares here.

P.S. One thing I've noticed scanning the Dow Jones Newswires the past year is that 3i has been steadily buying back its stock. Always a good sign.

February 22, 2006

Another Value Fund Closing

The Third Avenue Small-Cap Value Fund will close its doors to new investors at the close of business on February 28. The fund, managed by Curtis Jensen, has $2.3 billion in assets. Fully 39% of the portfolio is in cash.

Let's see. All three Longleaf funds are closed to new investors. Ditto both of the Tweedy Browne funds. Do these -- and other -- fund closings of top-notch value managers mean little is out there worth buying?

Maybe. Yet maybe not.

With the Third Avenue Value Fund managed by Marty Whitman remaining open, this is looks to be a "small-cap" thing. That is, larger portfolios have a harder time getting in and out of positions when investing in small companies. And Third Avenue Management apparently doesn't foresee enough to do in the near future with a portfolio over one-third in cash.

Further evidence is that the Longleaf Small-Cap Fund has been closed to new investors for years. In fact, Mason Hawkins and Staley Cates said a few months ago that it will almost certainly NEVER reopen. And the Tweedy Browne funds -- American Value and Global Value -- invest in both large and small cap names. (I happen to like not establishing market cap limits.)

My feeling is these closings speak more to assets under management becoming a bit unwieldy for the managers involved, as opposed to a lack of things to do for those of us with assets not totalling in the billions. Though I don't think there's a surplus of bargains out there.

Anyway, I wish I had the "problem" of finding enough to do with a multi-billion dollar portfolio.

Dorfman: 10 Stocks for the Long Haul

Bloomberg columnist and professional money manager John Dorfman lists 10 stocks for the long haul in his latest piece. Dorfman begins with a great story:

In the 1960s, my brother's father-in-law, a stockbroker, received some shares of Mohawk Data Sciences Corp. as a bonus. He asked for cash instead. "No,'" he was told, "you have to take the shares.'" He put them into a safe deposit box and forgot about them. Years later, he opened the box and found that the value of his shares had skyrocketed. He used the windfall to pay off the mortgage on the house owned by my brother and his wife.

Wouldn't we all love to have a few long-term performers like that in our portfolio?

Anyway, I don't own any of the stocks named in the column. Though I've posted several times that I may be making a mistake by NOT owning Pfizer. Dorfman writes:

Pfizer Inc. (PFE), based in New York, heads my list. Its stock price has been hurt by controversies over drug side effects, public pressure to reduce pharmaceutical prices, and increasing competition from generic products. Because of these woes, you can buy Pfizer for only 13 times earnings. The company has had 17 percent annual growth in profit the past five years, and offers a dividend yield of more than 3 percent.

Dorfman gives four criteria candidates must meet to make the list. One is that each company must have a market value of $2 billion or more. He doesn't say why, so I assume he thinks a lower market value would mean the company was less safe? Or is it to "protect" readers? I've heard hosts on the FOX News Channel business shows say they don't have panelists recommend stocks with market caps under $500 million, because they don't want viewers to rush out to buy and get whipsawed.

I agree with the sentiment -- but can't you simply warn viewers/readers when stocks with small market caps (or relatively few shares outstanding) are recommended?

Sure you can.

February 21, 2006

Reader Comments on CBS

Last week I posted that I'd established a full portfolio position in CBS. I stated:

CBS is undeniably cheap. It sells for 0.53 times book value and 0.45 times sales. The market cap is $10.7 billion and there are approximately 419 million shares outstanding. The dividend yield is 2.5%.

Those figures came from WSJ.com. I failed to state that some of the data was dated September 30, 2005. I forgot, and apologize for dropping the ball. It's important because September 30 was more than four months ago. Some of the data on WSJ.com is updated daily before the market opens. The market cap, dividend yield and shares outstanding data (and some other stuff) on WSJ.com can be found here and the book value and price-to-sales data (and some other stuff) found here.

Barron's Online provides the same info here and here.

Both WSJ.com and Barron's get their information from Reuters, which can be found here (scroll down for the ratios).

Ryan, a reader of this site, questioned some of this information. He referred to a Registration Statement filed on 2/1/06 and reports that CBS has roughly 800 million shares outstanding, not roughly 419 million. That the market cap is roughly $20 billion not roughly $10.7 billion. And that the price-to-sales ratio is more like 1.35 and not 0.45. He also reports that CBS' book value is $30 billion, which divided by 800 million shares puts the book value per share at roughly $37.50, which means the company would be selling for approximately 0.70 times book, and not 0.53.

Ryan checked with Morningstar and Merrill Lynch and found they too put CBS' market cap at $20 billion. I don't have access to Merrill Lynch, but I checked Morningstar and he's right about that.

But look here and see that Morningstar has CBS selling for 0.5 times book value and 0.8 times sales.

As you can see, there's some variance with the numbers depending on where we look. Not too much on many of the items, but that $10 billion difference on market cap is something. Plus, since Ryan reports his figures from a Registration Statement filed on 2/1/06, I should probably defer to his information. And I greatly appreciate Ryan commenting on this.

You see, this blog covers stocks and stock picks in a decidedly un-hyped style. The last thing I'd ever want to do is mislead readers by making a company appear cheaper than it is. CBS is described by market pros as either cheap with some great assets or cheap and boring. I just agree that it's cheap and said in my original posting that it will be like watching grass grow or paint dry.

Yet I think it's worth owning as well as watching and that's why I put my own money in it.

Lastly, it's a good thing CBS is reporting results this week. Perhaps we'll find out just how cheap this cheap stock is.

Nikko Cordial

Most days, there isn't anything to say about portfolio holding Nikko Cordial (NIKOY/OTC). That's a shame because the company's management is committed to shareholders and -- by all accounts -- does a fine job running the business.

But today isn't most days. Here's an interesting Bloomberg report on Nikko's plans to boost its LBO advisory business significantly. It's a lengthy piece, and a pretty good read.

Nikko Cordial ADRs were first mentioned on this blog last May at $8.64 (adjusted for a 5-for-1 split) and closed yesterday at $14.45. The company has become the largest portfolio holding -- by far. I've considered taking some profits but haven't so far. You'll read it here if that changes.

February 20, 2006

Discussing Value in Media Stocks

With the "Current Holdings" menu on the right containing four media-related stocks, I obviously believe value resides in the sector. Barron's ran a feature article on the area being attractive a while back. And now so has Investor's Business Daily, courtesy of this article by MarketWatch's Jonathan Burton entitled, "Why Value-Fund Managers Are Tuning Into Media Stocks." He writes:

When it comes to old-line media stocks these days, reading the business news might seem a lot like perusing the obituary page. Cause of death: online upstarts. But at least some veteran mutual fund managers believe the reports of the demise of established media are greatly exaggerated. Instead, they're researching newspaper chains, television networks and cable programmers they consider deeply undervalued.

Stated simply, these stocks are underappreciated by the market.

How underappreciated? Media is even more disliked than technology. For the five years through Feb. 16, the media sector lost 5.9% annualized compared with a 5.1% decline for technology hardware stocks, according to investment researcher Morningstar Inc. You can still find subscribers to the sector's long-term prospects, though, mostly among value-conscious managers of large-capitalization stock funds whose investment style and decisions have lately been out of favor.

Stocks mentioned in the article include portfolio holdings Comcast Corp. (CMCSK/NASDAQ), Liberty Media (L/NYSE), the DirecTV Group (DTV/NYSE) and CBS (CBS/NYSE) as well as other media stocks that I don't own. Interesting piece.

P.S. I also own some stock in Liberty Global, which were spun off from Liberty Media before this blog was launched. I've held on to them, but they are nowhere near a full position. I haven't been adding to them -- which may well be a mistake on my part -- and that's why Liberty Global isn't listed in the "Current Holdings" menu.

Controlled Greed.com in RealMoney.com Again

Thanks to James Altucher for again mentioning this blog in his “Blog Watch” column in RealMoney.com (I’m not a subscriber so I can’t link the piece). James linked my post from Friday, “18 Million Reasons to Feel Better,” about Southeastern Asset Management adding 18 million shares to its GM stake in the 4th quarter.

James wrote that he sometimes makes too much of who owns a stock before buying, and that my post showed he wasn’t alone.

Well, not quite.

Leaving aside the fact that the buying activity in GM stock mentioned in the post took place AFTER I had established my position in the company earlier in 2005, I DO look at who owns the stock of a company before I buy. But I don’t buy a stock or sell it because a certain manager has. It’s just a factor that can grab my attention and get me to investigate the company further.

Besides, they all do it anyway. Mason Hawkins and Staley Cates are looking at what Peter Cundill buys and he looks at what they’re in. And they both are looking at what’s going on in Marty Whitman’s portfolio and he’s reviewing their positions. And on and on.

So, why shouldn’t we? The fact is we should. Because we might get a profitable investment idea. And because, even if we don’t, we can gain further glimpses into their approaches to the value discipline -- which may pay off in the form of smarter investment decisions in the future.

We just shouldn’t take it to extremes. Like anything else you can think of.

But I am appreciative of James mentioning Controlled Greed in his column again. And welcome to all new readers finding this site through his RealMoney piece.

P.S. New readers might benefit from reading my post after the first time James mentioned this site. It gives a quick overview of what this blog is about. In the meantime, I hope you'll find this site useful, will become a regular reader, and recommend us to your friends and colleagues.

February 17, 2006

18 Million Reasons to Feel Better

When General Motors stock (GM/NYSE) dropped into the teens a while back, I didn't buy any.

I didn't sell any of my position. Yet I didn't add to it either.

Why? Because while I still felt that GM would turn to be a fine investment, the fact is it's a large position in the portfolio. I wanted to maintain the GM holding, yet I also felt using cash reserves for other investments was more prudent.

I noticed that Mason Hawkins and Staley Cates of Southeastern Asset Management did the same with their Longleaf Partners Fund. That is, they stood pat with their GM position and used avaiable cash for new investments. They bought more Dell in the 4th quarter, to name one. I spent the 4th quarter establishing positions in Deckers Outdoor (DECK/NASDAQ) and Comcast Corp. (CMCSK/NASDAQ) while adding to stakes in USA Mobility (USMO/NASDAQ) and The DirecTV Group (DTV/NYSE). (It should be pointed out that Longleaf Partners owns a big chunk of Comcast.)

Then I came across this Bloomberg report in the Australian Financial Review. The focus of the piece is news that Morgan Stanley has boosted its stake in GM and now owns 5.1% of the auto company's stock.

Well, that's all well and good. And it comes on the heels of Kirk Kerkorian's Trancinda Corp. recently reestablishing its 9.9% GM stake. But I've written repeatedly (and perhaps to the point of annoyance) that Hawkins and Cates holding GM means a lot more than Kerkorian's holding the stock.

So scroll down to the bottom on the report linked. You'll see that (while Longleaf Partners Fund has maintained its GM position) Southeastern Asset Management purchased a lot more GM stock in the 4th quarter:

Southeastern increased its holdings by 18 million shares in the fourth quarter, the most of any investor, according to filings this week. The company is run by Mason Hawkins, a buy-and-hold investor who owned shares of Hilton Hotels Corp for six years before selling near a record high at the end of 2004.

Of course, Southeastern's increased stake doesn't guarantee that GM will be a profitable investment -- I'm underwater with the stock -- let alone a repeat of Hawkins' performance with Hilton.

But those 18 million shares purchased by Hawkins and Cates leave me feeling better. And I'm hoping they and their owners won't be a case of good company onboard another Titanic.

February 16, 2006

Buying CBS

CBS Class B stock (CBS/NYSE) was purchased on Wednesay morning as a full position in the portfolio. The shares closed the day at $25.61 each. This blog first mentioned the possibility of buying CBS last June when it was first announced the company would be spun off from Viacom in early 2006 -- first on June 14 and then again on June 15.

CBS is undeniably cheap. It sells for 0.53 times book value and 0.45 times sales. The market cap is $10.7 billion and there are approximately 419 million shares outstanding. The dividend yield is 2.5%.

As you know, CBS was in fact spun out of Viacom at the beginning of the year. The company has valuable assets, including the CBS television network, a group of 39 TV stations, CBS Radio, a large billboard business, Showtime, book publisher Simon & Schuster and (for now) amusement parks. Wall Street has deemed the company a “no-growth old-media” outfit, doomed to perpetually slow growth.

But the CBS management team, led by Les Moonves, looks to be a top-notch bunch committed to boosting profitability and rewarding shareholders.

CBS generates ample free cash flow -- about $1 billion annually -- and just announced it was raising the quarterly dividend 14% to 16 cents a share. Some analysts predict that the company will likely begin repurchasing its stock in 2007, but that increasing the dividend over time is a higher priority.

Further good news is that CBS looks to be divesting itself of “non core” assets. The company recently announced plans to sell its amusement parks division in the second half of this year. It’s estimated this division would go for $640 million or more. Another piece that could be sold off would be Simon & Schuster, though that’s just speculation.

Put simply, I see CBS as being cheap as all get-out and that investors buying the stock at current prices will be rewarded in the years to come. It may be like watching grass grow or paint dry. Yet a combination of share price increases, dividends and stock buybacks should give the portfolio a decent return on the investment.

What could go wrong with this investment? My view is the biggest “risk” with owning CBS stock is that it becomes dead money. That the “no-growth old-media” worries turn out to be the case. There are problems. Bears will point to the ratings dominance of CBS TV waning, the loss of Howard Stern from CBS Radio, and the fact that 70% of revenues come from advertising -- leaving the company vulnerable to any weakening in the economy. Not to mention many investors just plain view Viacom’s assets (such as MTV, Nickelodeon, and Paramount studios) more favorably anyway.

But for my money, the pluses outweigh the minuses with CBS. Just be sure to do your own due diligence before doing any buying.

UPDATE: I should have pointed out that book value and other information on CBS was obtained from WSJ.com and dated September 30, 2005. Apologies to all for not stating that in the original post.

February 15, 2006

New Order Placed

I placed an order to buy stock in a media company this morning. It will be a new position in the portfolio.

I'll post my rationale for owning the stock later this evening or first thing tomorrow morning, assuming the order gets filled. Stay tuned.

February 13, 2006

Let's Make A Deal

If you and I buy stock in a company we believe is undervalued -- and we're right in that belief -- then by definition it could find itself "in play." I love it when I hold a stock and another company makes an offer to purchase it. And I especially love it when the offer is fair and for cash.

That was certainly the case with Imagistics International last September.

Of course, deals aren't always for cash. But what the heck. I generally like a climate of deals getting done and see that now even companies from emerging markets are getting in the deal game on a global basis, as reported in today's Wall Street Journal:

Companies from emerging markets, armed with piles of cash from rising commodity prices and abundant financing, are snapping up targets in Europe and the U.S., a trend that could shift the global economic balance of power in some industries.

The piece is interesting. Though it could mean nothing for the holdings listed on this site. Then again, it could mean something. I wouldn't be surprised to see a company -- from a developed or emerging market -- make an offer for Deckers Outdoor Corporation (DECK/NASDAQ) or USA Mobility (USMO/NASDAQ), to name two.

No, that's not a prediction. Just a possibility.

Because the more deals are getting done around the world, the greater the chances of seeing value unlocked in undervalued companies. Sometimes even the ones you or I own.

February 11, 2006

Barron's Online FREE This Week

Get the details from Barron's Editor Ed Finn here if you're not already a subscriber.

Anyone managing their own investment portfolio almost certainly subscribes to several publications and/or services. I can't imagine Barron's -- either the hard copy or online format -- not being among them. Free access lasts to Monday, February 20.

February 10, 2006

Interview with Cundill's Andrew Massie

You've read here that one of the investors I admire most is Peter Cundill, the legendary Canadian value investor. Cundill oversees mutual funds and limited partnerships. But his flagship investment vehicle is the Mackenzie Cundill Value Fund in Canada. Morningstar has interviewed Andrew Massie, who co-manages the fund with Cundill and David Briggs. The article is by Diana Cawfield:

With its deep-value mandate, the Cundill team scours the world for "unloved, unwanted," stocks, says Massie, of Vancouver-based Cundill Investment Research Ltd. "Analytically, we feel that the global markets are fairly valued, not overvalued or undervalued, so we're going to stick to buying cheap stocks.

The managers like to buy companies that are trading at 60 cents on the dollar in terms of their assessment of fair value, and they will typically sell at 100 cents on the dollar. "The art is in the selling," says Massie. If something trades at multiples of fair value, there is no margin of safety and they don't want to own the stock.

"We probably turn over a third of the portfolio a year," says Massie. But there are a couple of names that have been in the fund for about 15 years. As long as the stock is trading at less than net asset value, says Massie, they're happy to hold it.

Massie discusses how Cundill's approach has changed:

Over the years, there's been an evolution as opposed to a revolution in the Cundill team's stock-picking strategy, says Massie. When he joined the firm in 1984, the managers were looking purely for stocks trading at a nice discount to book value. These days, they're looking for stocks trading at a discount to fair value, looking for the extra assets.

"Because if you stick to the way Peter was doing it in the 70s and early 80s," says Massie, "you end up with value traps: stocks that are statistically cheap, continue to be cheap, and there's not a lot going on."

Then he talks about the Cundill approach to portfolio concentration, their bottom-up method of finding stocks, and where most of the fund's money is invested.

Mackenzie Cundill Value holds a fairly concentrated portfolio of 34 stocks. The comfort level for the average stock position is no more than 5% of assets, but that will be raised if the team really likes an idea.

Typically, the team doesn't go looking for companies by countries or sectors, and the fund's geographic and industry exposure will be very different from the MSCI World Index. Currently, the highest industry sector weightings are in global financial services and insurance.

As for geographic exposure, at last report the biggest equity weighting was the hefty 38.1% held in Japan, followed by a very much underweight 11.1% in the U.S.

The fund's cash holding clocks in at 26.3% as of December 31, 2005.

Friday Morning

Here are a few things to chew on before the weekend.

  • The Lady Knows How to Pick 'em. One of Meryl Witmer's stock picks in this year's Barron's Roundtable is Rolls-Royce PLC. The company announced a 40% jump in operating profits for 2005. I noticed that it was also a pick of fellow Roundtable participant Mario Gabelli. As might be expected, Rolls-Royce stock dropped 2% on the news. Big deal. I wish it would drop a lot more so I could buy it. I have a hard time getting excited about the shares at recent prices. And I may be wrong. You heard it here first.
  • Icahn't See Him Winning This One. Regular readers know I post a bit on the subject of "Western Style Corporate Governance" (read "Anglo-Saxon Capitalism") slowly taking root around the world. So I've been keeping an eye on Carl Icahn and his involvement in KT&G, the South Korean company. I doubt Icahn and his supporters have enough stock to achieve the changes they desire. I'd also like to know how Peter Cundill and Templeton's Mark Mobius would vote their shares in any proxy fight. Readers of this blog know that I own stock in Korea Electric Power (KEP/NYSE), which was purchased before Controlled Greed.com was launched. That's why it's not listed in the "Current Holdings" menu at the right. KEP is the only South Korean company I'm invested in.
  • Giving Them the Gittelfinger. According to Doron Levin, the Bloomberg columnist covering the auto industry, UAW President Ron Gittelfinger is "about to ensure that his union will have little or no importance in the future of the U.S. auto industry as he pushes the world's No. 1 automaker and employer of tens of thousands of workers toward bankruptcy." I hope Levin is wrong, but it's a compelling column.
  • 10,000 Reasons and One Good Read. Speaking of Bloomberg columnists, William Pesek Jr. writes this morning about India's prospects in a piece entitled, "10,000 Reasons India Is A Good Investor Bet." I used to own Videsh Sanchar Nigam Ltd. (VSL/NYSE), the Indian telecommunications company, a few years ago. I did well with it through a combination of price appreciation and privatization payouts. The only Indian exposure the portfolio has now (and limited at that) would be through 3i Group PLC, thinking off the top of my head. Regular readers know that 3i opened an office in Mumbai a few months ago.
  • He's Bad, He's Nationwide. With apologies to ZZ Top, I'm not qualified to do the "countrywide" approach to investing. Still, Maoxian gave some solid reasons for investing in Malaysia that any proponent of ETF investing would find appealing. Check it out.
  • North on Gold and Silver. Another strategy I haven't followed is investing in gold and silver coins. But anyone considering doing so will find this article by Gary North worthwhile.

February 09, 2006

Welcome Readers of MarketWatch

This site has been getting a lot of visitors from MarketWatch this morning. The reason is because MarketWatch's David Weidner mentions this blog in his "Writing On The Wall" column (registration may be required). He doesn't seem to much care for blogs and bloggers -- the headline for the piece is "Pixel-stained wretches" and the subhead is "Commentary: Wall St. blogs have their moments, but few."

But hey, they say there's no such thing as bad publicity. So I appreciate being mentioned in MarketWatch -- and specifically being listed with quality sites such as The Stalwart and All Things Financial.

So greetings to those of you arriving here via MarketWatch.

As you will see, this site is about my adventures as a stock picker. I personally own every stock recommended on this blog. That means I eat my own cooking. I also follow up with posts alerting readers whenever I add to or sell a position.

If you like what you see here and want to know more, start by reviewing the “Current Holdings” menu at the right. You can click on the name of each company to see the original rationale for owning its stock. And you might see more stuff to your liking when roaming back through the archives.

In the meantime, welcome.

I hope you’ll find this blog a valuable source of uncommon investment ideas, will return often, and recommend it to your friends and associates.

P.S. The MarketWatch column uses the old URL for this site. The correct URL is www.controlledgreed.com.

Not Pulling the Trigger let the Mouse Get Away

The recent news that Disney will sell its 22 ABC radio stations and network to Citadel Broadcasting reminded me of something. Nothing to do with radio, but with Disney.

Specifically, it reminded me when Disney stock was selling for roughly $13 a share a while back and I didn’t buy any. I think it was three or four years ago but I can’t remember offhand.

I do remember it was when Larry Kudlow and Jim Cramer had a CNBC show together. I remember it was when they were coming on at 8:00 p.m. Eastern Time here in the US. I think this may have been when their show was called “America Tonight,” before changing the name to “Kudlow and Cramer.”

I’d catch the show during this period and see them both dumping on Disney the company and Disney the stock. They especially dumped on then-CEO Michael Eisner. And I remember thinking that Kudlow and Cramer were wrong. That despite Disney’s shortcomings and challenges, the stock was undervalued. That it was worth more than thirteen bucks a share and long-term investors would be rewarded if they bought the stock.

And yet I didn’t buy it. Why? I don’t know. Maybe I didn’t have enough cash in my brokerage account at the time. Maybe I would have had to sell another position to establish one in Disney, and didn’t feel like doing that. Or maybe (and more likely) I just flat out didn’t pull the trigger. We all experience those times when we don’t do things we know we should. And I guess some of those instances fall within the area of investing.

But I missed out. Disney stock has since gone above $26 a share at times. So I would have roughly doubled my investment over a three or four year period. And done even better when you include dividends. Not bad at all.

Some respected investors believe Disney is really undervalued now. Perhaps it is. But that means it was REALLY, REALLY undervalued then. Ouch.

P.S. Don’t take this post as a slam at Larry Kudlow or Jim Cramer. I’ve never followed Cramer because he strikes me as more of a trader (which I’m not) and an entertainer (which he’s good at but not to my taste). I should add that a columnist for RealMoney.com recently mentioned this blog and I’ve experienced increased readership since, for which I'm grateful.

As for Kudlow, I broadly agree with his economic views -- that taxes should be low and government spending likewise. I try and catch his show when my schedule permits (about once a week) and I enjoy it when he substitutes for Bob Brinker on the Moneytalk radio show broadcast on weekends. But he’s an economist, not an investor, and there’s a difference (with all due respect to any economists reading this).

P.P.S. Going off topic for a moment, I’ve got to say I like Kudlow’s taste in shirts. I’ve read he frequents the New York City location of Turnbull & Asser, the venerable shirt maker based in London. Pretty dapper.

February 08, 2006

York on Board, Part 2

Maybe I should change the name of this site to the "Hawkins & White Blog." Why? Because things are still crazy for me this week and this is the second straight day I'm posting a Wall Street Journal feature article on General Motors (GM/NYSE) by Lee Hawkins Jr. and Joseph B. White.

These guys have consistently done top-notch work on the subject of GM. Sometimes in reports authored solely by themselves. Other times in articles with contributions from other Journal staffers (as is the case with this morning's piece). They always do a thorough, even-handed job, and seem like they have no ax to grind. Today's page one feature is yet another example of this.

There's nothing in it to make you change your current view of GM -- whether you're bullish or bearish on the stock. But if you want a sound round-up of recent events in the GM story, this piece fills the bill.

P.S. Last week I posted about Forbes' columnist Jerry Flint pooh-poohing any chance of GM filing bankruptcy. To give the other side, I note that today's BreakingViews column (scroll down) in The Wall Street Journal Europe isn't entirely impressed by York's arrival on GM's board. They think he's a plus, but conclude, "Filing for Chapter 11 still looks the most likely way for GM to restructure such costs and benefits." I'm long GM so you know who I hope will be proven right.

P.P.S. I'm still looking for some new stocks to add to the portfolio. And I'm cautiously optimistic one or two new positions will be established fairly soon. Stay tuned and thanks for your readership.

 

February 07, 2006

York on Board

This is another crazy day for me. Still, I want to post a link to The Wall Street Journal's article this morning recapping the story of Jerome York's addition to the Board of General Motors (GM/NYSE). Journal reporters Lee Hawkins Jr. and Joseph B. White do their usual excellent job and you'll enjoy reading this piece if you haven't already.

I see this as a good development (no surprise), though regular readers know I bought GM before Kirk Kerkorian came into the picture. I've stated repeatedly that I view Southeastern Asset Management and Brandes Investment Partners being major holders of GM stock more important than Kerkorian's Trancinda Corp. Yet I've also stated previously that I view Kerkorian's stake as a good thing -- because it shakes things up.

The dividend will get slashed. Am I happy about that? No, but I'm more focused on GM's stock appreciating over the next few years than I am in it being an income play. If cutting the dividend aids in that desire becoming a reality on my brokerage statement, so be it.

February 06, 2006

You, Clyde and Me Against the World (or Maybe Just Against the Conventional Wisdom of Analysts)

Last week I posted that being a value investor frequently leaves you feeling like you're apart from the crowd. The example used was how the news was focusing on interest rates, a new Fed Chairman and Google's stock price while things attracting my attention included NTT DoCoMo reporting sharply lower profits.

Stated another way, the mainstream financial media views events from a top-down perspective while value investors take the bottom-up view.

That's why, when we find a bargain-priced stock, we buy it without regard to the "noise" of the day. The "noise" might be worries about rising interest rates or gas prices. It might be Middle East tensions or corporate scandals. It might be anything. But we value players buy the bargain stock anyway -- because we're willing to hold it for the long-term. We accept there will be unforeseen ups and downs in the months and years ahead. Yet we believe that (in most cases) the stock will ride out these ups and downs and be higher 3 to 5 years from today.

In addition to being "apart from the crowd" in news events, value investors often buy stocks BEFORE analysts recommend them. I've often bought stocks that had no analyst coverage. And I've also bought stocks that had analyst coverage -- but the analysts were either cool or outright hostile to the companies.

Clyde Milton touched on this on his Cheap Stocks blog Friday. It turns out Clyde uses Charles Schwab. So do I. And I echo his positive comments on the customer service found with the broker. He writes:

As some of you may know, a few years ago, Charles Schwab developed a rating system for stocks, appropriately dubbed “Schwab Equity Rating”, which grades stocks as A, B, C, D, F, or NC (not covered). I’ve had a Schwab account for years -- its where my stock portfolio resides, and I’ve been very happy with their service, and declining commission structure. There are cheaper discount brokers out there, but I’m sticking with Schwab.

So, it was quite interesting the other day when I viewed my portfolio holdings on a page that also displays Schwab’s rating for each stock. Boy was I in for a surprise. If I were to view each of the ratings as a “grade” reflecting my investment prowess, I am sadly below average. In fact, for the 18 “classes”, I received 2 B’s, 2 C’s, 5 D’s, and 9 “Not Covereds”, or as I view it, “Incomplete”. That averages out to a C-, or even D+!

Then Clyde gets to the heart of the matter:

I didn’t take I personally. My investment style is somewhat off the beaten path, and although there are some household names in the portfolio, many others, such as those we typically profile on this site, just are not on anyone’s radar. But therein lies the beauty. Some companies fall off the radar because they are either too small for the Street to care about, or they just fall out of favor, and languish with little or no coverage. That’s where we come in (We, meaning deep value investors). We have the ability to identify, and analyze these companies, and discover an interesting and potentially profitable story, that no one else has even cared to investigate.

Regular readers know I think Cheap Stocks is a top-notch site and this posting of Clyde's is a great read. So read the whole thing, which includes his list of holdings. I don't own any of the companies he does, and you might not either, but that's no big deal.

Buffett pointed out in his "Superinvestors of Graham-and-Doddsville" that value players often hold different portfolios, yet remain true to the approach. So those of us who are value investors are with Clyde in spirit -- if not the same positions.

Reminder: Conference Call Transcripts Available on Seeking Alpha

On Friday I mentioned that portfolio holding Comcast Corp. (CMCSK/NASDAQ) reported disappointing results for the 4th Quarter of 2005. I should have pointed out that you can read conference call transcripts for some companies on Seeking Alpha, including Comcast.

This is a worthwhile service because it's much easier to read these things than listen to them. When listening, you almost always have those moments when you need to go back and listen to something said again, which is a pain. I'm sure Seeking Alpha will be adding more and more companies in the future. Making their site increasingly valuable to investors over time.

February 03, 2006

Mark Mobius Interview

Templeton's Mark Mobius was interviewed earlier today by Alec Hogg of Moneyweb in South Africa. The interviewer asked Mobius questions based on themes he (the interviewer) detected coming out of the World Economic Forum in Davos, Switzerland. Some of the most interesting bits are:

Mobius on China:

"Well, the China story keeps on forging ahead. The growth has been escalating, as you well know, and growth continues. What is happening now of course is that the Chinese economy is becoming more of a domestic [indistinct] economy, rather than an export [indistinct] economy, and of course the Chinese government wants to promote the domestic consumption because they realise they cannot continue to dominate export markets around the world. And it’s got to start acting as an engine to the rest of the world, and it has begun with the Asian countries exporting more to China than they are importing from China. So that’s a good sign, and I would say that their growth is on track."

Mobius on India:

"Yes, the Indians do want to do more manufacturing, but I’m afraid they are going to have to make some very dramatic changes in the labour laws to begin with, and in the licensing programmes that they have in India. As you know, the Indian government has a very complex licensing system which puts a lot of barriers in the way of expansion in the manufacturing sector. And of course our labour laws also restrict people. So I think there have to be some fundamental changes in their thinking before they can match China in that regard. Of course in some specialty areas [indistinct] fine, but generally speaking they have to make some big changes."

Mobius on Commodities:

"Yes, I believe that the commodities will still – I’m not saying they are going to continue going up, but they will stay at a plateau that is much higher than it was historically, and that’s simply because of supply and demand. The demand coming out of China, India, in other places, is going to sustain the prices of these commodities. So you must remember, we are already seeing a number of corrections in prices. Palladium has come down, steel has come down and a number of other commodities, tin has come down. So we can expect corrections along the way but, as these corrections take place, they will find a level which is higher than the historical average."

Mobius on Gold:

"Well, the same thing. I think you’re going to see gold at a higher plateau because of the demand coming out of the central banks. I get the feeling that, for example, the Chinese central banks would like to diversify out of US treasuries and have a little bit more gold, so that any additional inflows they have, in addition to the demand for jewellery out of China and India, are continuing to increase. So the prognosis for gold is pretty good."

Interviewer Hogg also asked Mobius about investing in South Africa compared to other emerging markets such as South Korea and Taiwan.

P.S. You can also listen to this interview. Just look at the menu of the right hand side of the linked page.

Let's See If Anything Turns Up

Well, we're getting into earnings season. Maybe some company will have had a surprisingly bad 4th quarter and see its stock price get knocked down.

Down to the point of being a bargain.

I hope so -- the "Current Holdings" menu on the right lists 10 stocks. I'd like it to eventually have 20-25. That's what I consider a fully invested portfolio. We'll just have to wait and see if anything turns up in the next few days and weeks.

Speaking of earnings season, you may have seen that portfolio holding Comcast Corp. (CMCSK/NASDAQ) announced disappointing results for the past quarter yesterday. The nation's largest cable company saw profits slide 69% for the quarter as investment losses and a higher tax rate offset gains in its core businesses of selling cable TV service, high-speed internet connections and digital phone service.

Comcast was first recommended here on November 18 at $26.73 a share (note I purchased the Class A Special series of stock). These shares closed yesterday at $27.00.

Despite the concerns many on Wall Street have about Comcast, I like the company at current prices and wouldn't hesitate to put 4-5% of my portfolio in CMCSK if I hadn't already done so in November.

Just remember that I could always be wrong. So please do your own due diligence before investing in the company.

And in the meantime, let's see if anything shakes out as companies announce 4th quarter results.

February 02, 2006

Mobius Makes His Mark with 40% Gain in Emerging Markets

Apparently, using a long-term value approach to investing pays off in emerging markets. As long as you're willing to go through periods of under performance.

You know, like in developed markets.

Just ask Mark Mobius, Templeton's emerging markets guru.

Mobius racked up a 40% gain in US dollar terms in the Templeton Emerging Markets Investment Trust last year. Bloomberg ran a nice feature piece on him, providing insight to his current market views -- banks account for 21% of his portfolio and 8 of his top 10 holdings are either banks or oil companies.

There's plenty of interesting stuff in this article. Including background on Mobius' background and what he did before joining Templeton in 1987. He'll turn 70 years of age this year, but he's still a kid compared to Irving Kahn, right? ;-)

Most importantly, I think, is the fact that his average holding period for an investment is 5 years.

Very Short Interview with Irving Kahn

An interview with Irving Kahn of Kahn Brothers was broadcast yesterday on National Public Radio's "Morning Edition" program. I found it a bit disappointing, because it's only a couple of minutes in length. But you still might enjoy hearing from this 100-year-old investor -- who still works in the office every day.

My post from December 19, "King Kahn," was one of the most popular this blog has had. It references a feature piece Barron's did on Mr. Kahn the week of his 100th birthday. You might enjoy reading it if you haven't already.

February 01, 2006

Apart From the Crowd

If you're a regular reader, chances are you're either a value investor or at least interested in the approach. And if so, you probably feel like you're just not part of the "in" crowd at times.

That's certainly true with me. And I was reminded of that yesterday.

Scanning WSJ.com and other news sites gave the impression that all investors cared about was the Fed moving on interest rates, Greenspan stepping down and the plight of Google.

I didn't have a chance to see TV yesterday during the day. But if I did, I wouldn't have been surprised to see talking heads speculate on "how the market will do" with Alito confirmed to the Supreme Court and whether or not Bush gets a bounce from his State of the Union speech. (One of the annoying things I've noticed on some business shows on cable TV is how they bend over backwards to tie general news topics to stock market performance.)

This is not to suggest that things like interest rates and who heads the Fed aren't important. Or don't make interesting reads.

Yet none of that kind of stuff has ever factored into my stock buying (or selling) decisions. That may be to my detriment, but it's true.

Instead the kind of things popping out at me yesterday -- actually last night -- included NTT DoCoMo reporting net profits falling 32% for the nine month period ending in December. The company is Japan's largest mobile phone operator and has been a portfolio consideration for a while. Will these latest poor results create a buying opportunity to good to miss?

I don't know. But I do know this:

Whether NTT DoCoMo is a bargain or not has NOTHING to do with interest rates, who the Fed Chairman is, or Google's stock price. Or all that other noise you hear in the mainstream media.

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  • All information posted on this web site has been obtained from sources believed to be reliable, but accuracy and completeness cannot be guaranteed. Under no circumstances is this an offer to sell or a solicitation to buy securities discussed on this site. Past performance is no guarantee of future success. Any investments, trades, and/or speculations made in light of the ideas, opinions, and/or forecasts, expressed or implied herein, are committed at your own risk, financial or otherwise. CONTROLLED GREED.com, its editor and/or related parties have positions in companies discussed. All data, information and opinions are subject to change without notice.