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« September 2006 | Main | November 2006 »

October 31, 2006

Buy The Little Book of Value Investing

I recently finished The Little Book of Value Investing by Christopher Browne. And then today Controlled Greed.com received a Blogad order for the book from its publisher.

Good timing.

If you're new to value investing, buy this book. And if you're still attracted to the concept after reading it, then you'll want to move on to the writings of Benjamin Graham.

But here's one of the great things about Chris Browne's work -- the book is STILL worth your time and money even if you've been practicing the value approach for years.

You'll enjoy reading Browne's copy, for one thing. He writes in a friendly, non-textbook style that I find refreshing. And you'll like the fact that Browne isn't just talking the talk -- he's walked the walked as a member of Tweedy Browne.

You'll also benefit because the author spends a fair amount of time on applying the value approach to global markets. As you've read me say here repeatedly, buying stocks in foreign (non-US) markets isn't as easy as it should be. But it is getting easier over time and investors shouldn't ignore the potential bargains to be found abroad.

Browne even writes about how investors look over each other's portfolios. You can get a headstart in building a list of portfolio candidates this way. I remember that money manager and author John Train called this method "reverse engineering."

Click the Blogad and find out more about this fine book. Then buy it for yourself or someone else. The holidays will be here before you know it, after all.

October 29, 2006

Festival of Stocks Reminder

This week's Festival of Stocks is being hosted by ValueBlogger.com. Be sure to check it out starting Monday and sample the well-researched, always-interesting posts by a variety of stock market bloggers.

DirecTV Group

Reading DirecTV Group (DTV/NYSE) being mentioned by Blair Levin in his interview in Barron's reminded me of something. Specifically, that often there's not much to say about many the portfolio's holdings -- especially when they gradually rise in price over time.

That's just not the stuff of headlines.

I recommended DirecTV in July 2005 at $15.50. It closed Friday at $21.91 -- a nice gain of more than 41% in 15 months. Most media-related holdings have done well this year.

In the Barron's interview, Levin wondered something posted here previously: speculation that Rupert Murdoch will give his controlling interest in DirecTV to John Malone, in return for Malone giving Murdoch his chunk of News Corp. stock. As you know, I've always liked the Murdoch people running DirecTV because of their proven experience operating satellite companies. But I wouldn't mind John Malone gaining control, because he's a fine operator in his own right.

Levin goes on to say:

Once its ownership is decided, then the question of what the right market structure is for DBS can be decided. Should the DBS companies, DirecTV and EchoStar, try to merge again? Should one or both of the DBS companies be bought out? Should they just remain the way they are? The first two options are the most likely. The DBS companies have a problem because they don't have a broadband pipe and therefore they are missing the data and voice parts of the bundle as well as mobility. They're now competing in a market that is more difficult than the market of two or three years ago. Plus, the telcos are entering video, and competition from them is going to make the satellite companies' lives even more difficult.

Asked what they gain by merging, Levin says:

They get economies of scale that help them in the video business. But more importantly, they get a critical mass of subscribers that enables them to invest in a greenfields broadband build out.

And what are "greenfields"?

In other words, they would build a brand new network. They have apparently been talking with Clearwire, Craig McCaw's wireless broadband company. The DBS companies would put up the money so they could build out the network across the nation faster. Another avenue they are considering is investing with the mobile-satellite-services players to build out a network and offer on top of it a broadband offering and a Voice over IP [Internet protocol] offering. Suddenly they would have something that looks like the cable bundle or Bell bundle. The problem with that is there is significant regulatory risk were the government to turn down the merger. There is significant technology risk that an investment in Clearwire and the satellite services doesn't scale well, the technology doesn't work or it is too slow relative to what cable and the Bells can do. There is financial risk that it costs more to build it out. There is market risk that by the time it is built out all the good customers are taken. If you are Charlie Ergen, the CEO of EchoStar, or John Malone or Murdoch, there is also personal risk, which is: How well do they get along? The history of such mergers and joint ventures between Ergen and others has been the relationships don't last long.

Levin goes on to explain that the odds of a merger between DirecTV and EchoStar are a lot better today than before, though regulatory hurdles remain.

He also seems to think AT&T might buy EchoStar, and that DirecTV may get left out.

We'll just have to see how this all plays out. And you can say that about most anything concerning broadcasting and media-related companies these days.

Jim Gant on David Winters

You probably saw my post a week or so ago linking to an article on David Winters. If you liked that, you'll like this even more -- Jim Grant devotes his latest Forbes column to Winters:

The award for the most perplexing career move of 2005 goes to David J. Winters, formerly chief executive officer and chief investment officer of Franklin Mutual Advisers. Winters resigned from that $35 billion fund behemoth in order to found his own mutual fund. Repeat: mutual fund, not hedge fund. He calls his creation Wintergreen.

By its charter, Wintergreen could almost be a hedge fund. It can invest anywhere, in anything. It can buy stocks or sell them short. It can invest in bankruptcies, liquidations and distressed securities. It can do business at home or abroad. But Winters doesn't get 20% of the profits, as hedge fund operators do. The investors, of whom I happen to be one, keep all of the upside, net of fees and expenses, which happen to come to a stiff 1.95% of assets yearly. It's worth it.

This jumps out:

Ask him the question most often put to hedge fund jockeys by jumpy institutional investors: "What's your edge?" And he replies, "We're long-term investors."

And this:

A member of the value investment tribe, he means that good things happen to cheap stocks over the sweep of years. Five years is Winters' idea of a decent holding period.

Yet another fine piece by Grant, long the finest writer of words in financial journalism. The fact that Grant, as he reports in this piece, has money invested in Winters' fund is especially noteworthy.

October 28, 2006

Buffett Biographer Interview

This weekend, Financial Sense Online has an audio interview with Andy Kilpatrick, author of the newly-revised Of Permanent Value.

Here's Amazon's description of the book:

The theme of this fully revised biography about Warren Buffett is books, books, books. Many works directly related to Buffett or Berkshire Hathaway, as well as many indirectly related, are the focus. For example, a chapter about Procter & Gamble includes photos and information about books written about P&G. A good number of the more than 1,100 photos in the book relate to books to help move the story, indeed the odyssey, along. The muse for this odyssey is James Joyce's Ulysses. The cover is blue because the original cover of Joyce's masterpiece was blue. The back cover of the book sports a superb photo of Buffett and Bill Gates standing together at a golf outing.

October 27, 2006

Comcast Kicks Butt

It's easy to fall into the trap of concentrating on the weaker holdings in the portfolio. Which right now would be Media General (MEG/NYSE) and Takefuji Corp. (8564/JP or TAKAF/OTC).

Perhaps it's just the human tendency to focus on the bad. Or maybe it's that more news reports come across my desk concerning these companies.

You know, if it bleeds it leads. Or no news is good news.

With all that said, let's give a tip of the hat to Comcast (CMCSK/NASDAQ) CEO Brian Roberts and his team. The company just released excellent third-quarter results. It's amazing this outfit was being ignored by Wall Street a year ago -- the conventional wisdom being that Comcast was a boring old cable company. Good grief.

From the linked Bloomberg report:

Comcast Corp., the world's largest cable-television provider, said third-quarter profit soared fivefold on the purchase of Adelphia Communications Corp. and record sales of telephone and digital-television services.

The shares rose as much as 4.5 percent after net income jumped to $1.22 billion, or 58 cents a share. Sales rose 22 percent to $6.43 billion, Philadelphia-based Comcast said today. Excluding gains related to Adelphia, profit was 26 cents a share, beating the 19-cent average analyst estimate.

Comcast added more new phone, digital-TV and high-speed Internet customers than analysts predicted. The company's offer of all three services for $99 a month fueled the growth, Chief Executive Brian Roberts said. This quarter will be "as good or better'' Roberts told analysts today on a conference call.

You can read my original rationale for buying Comcast in November 2005 here. I own the Class A Special stock (symbol CMCSK).

Takefuji Issues Threat to Thwart Takeover Attempts

Yesterday, Takefuji Corp. (8564/JP or TAKAF/OTC) said it will take action to fend off takeover bids. Bloomberg reports (scroll down the linked article):

Japan's second-largest consumer finance company by market value said it will double its number of shares outstanding should a hostile bidder acquire at least 20 percent of its stock, diluting the holdings of current shareholders.

As you know, takeover speculation regarding Takefuji picked up when news broke that Peter Cundill boosted his holdings and now owns more than 8% of the company. This in addition to Takefuji already having substantial foreign ownership -- not to mention that Japanese investors are slowly becoming more activist.

We haven't seen the last of this story.

October 26, 2006

Larry Sarbit

I'm not familiar with Winnipeg-based Larry Sarbit, but find this profile of him in the Globe and Mail interesting. Here's some of the article written by Andrew Allentuck:

By reputation, he is famous -- or infamous -- for holding substantial amounts of cash until the right opportunities come along, steadfast to the principles of value investing invented by Ben Graham and echoed by Warren Buffett, the Oracle of Omaha. "There are times you can only get a T-bill return," Mr. Sarbit says. Currently, his lead fund, the Sarbit U.S. Equity Trust, holds 40 per cent of total assets in cash.

Mr. Sarbit does not have Mr. Buffett's international stature, nor, with $67-million in his U.S. stock fund, the grand man's billions. But Mr. Sarbit does have a reputation for sticking to his principles of deep value investing. At Investors Group, his first gig as a portfolio manager, he racked up an average annual compound return of 18.6 per cent in the decade following the market crash of Oct. 19, 1987.

This further down:

The current investments in the U.S. Equity Trust are vintage Sarbit. Most are priced below book value and far below the average of other U.S. equity funds. The price-to-earnings ratio of the portfolio is about 75 per cent of its peers, the average market capitalization 10 per cent of its peers, the dividend yield significantly higher and the number of holdings -- about a dozen -- a small fraction of the 162 companies held on average by U.S. equity funds, according to Morningstar research.

Keep in mind Sarbit currently holding a dozen stocks is in the context of him also holding 40% cash.

His top five positions as of September 30:

Foot Locker 8.68%

Clear Channel Communications 7.76%

SM&A 7.12%

Regis Corp. 5.58%

International Speedway 4.71%

October 25, 2006

Just Hangin' Out

Well, here I sit at the keyboard with nothing specific to write about. I haven't come across any interesting news stories that report on any portfolio holdings. Or any other stories catching my eye.

I've also been swamped with non-blogging duties and projects this week. So I haven't had time to write anything much at all.

My plan is to be writing more pieces like How to Research Foreign Stocks and How to Buy Stocks Listed on Foreign Exchanges. Not all about international investing, of course, but more original pieces. I get a lot of positive feedback from readers when I produce that type of content. And I think it gives Controlled Greed.com its own place in the sun.

That said, this blog is about my stock picks.

And its worth rests on the overall long-term performance of the stock picks made here.

Speaking of which, I did glance at my brokerage account this afternoon after the market closed. Everything seems to be doing well -- except Takefuji and Media General, of course -- but I imagine most portfolios have done fine lately.

And, I remain cautiously optimistic that Takefuji and Media General will prove to be profitable investments. But they will take some time to work out.

Look for me to add one or two more new positions to the portfolio in the coming weeks. I want to get the portfolio up to 25 holdings, and I'm not there yet. I've got three candidates that I'm checking out. Two based in the US and one foreign.

Let's what, if anything, happens.

October 24, 2006

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.

October 22, 2006

Takefuji in Barron's

Leslie Norton mentioned the Japanese consumer lenders in her "International Trader -- Asia" column in this week's Barron's (scroll down to the fifth paragraph).

As you know, I'm bullish -- and underwater -- on Takefuji Corp. (8564/JP or TAKAF/OTC).

Norton writes that the sector may be cheap, and also:

Those companies took up the slack when Japanese banks, stung by bad corporate loans, abandoned retail borrowers. Today, some 20 million Japanese rely on consumer-finance companies, borrowing at rates of up to 29% while the companies have built up significant databases. Lately, the government has made plans to cap the maximum rate at 20% and force companies to reimburse customers for excessive interest payments. Ayako Sato of UBS Securities notes, too, that the most creditworthy customers are migrating to other institutions. But consumer-finance companies like Takefuji, Aiful, Acom and Promise have competitive advantages. "Even if banks wanted to enter this area, they don't have the credit database," says Egor Rybakov of Tradewinds Capital in Los Angeles.

To Rybakov, these stocks are good buys. Takefuji now trades at 0.7 times book, versus three times in 1999 and between one and 1.5 since late '02. Promise sold at 2.5 times book in '99, fell to 1.5 and now trades at 0.7. Book is probably overstated, Rybakov says: "You have to assume they're forgiving principal to a certain percentage of borrowers." Nonetheless, the companies are overcapitalized. Today, equity at Takefuji is a high 54% of assets; at Promise, it's 44%; at Acom, 45%, and at Aiful, 23%, leaving plenty of room to boost returns.

Rybakov's thesis: Even at 0.7 times book and assuming the companies set aside 30% of book for interest reimbursements and loan forgiveness, they still trade at one times book. "This is a strong value proposition," he says.

You know I agree with him, since I'm in Takefuji stock. And that despite the fact that Bloomberg is reporting Takefuji is among the consumer lenders ready to report first-half losses, due to setting aside money for consumer fraud claims.

October 21, 2006

Buffett Rescues 34,000 Lloyd's Names

Warren Buffett and Berkshire Hathaway come to the rescue of 34,000 Lloyd's Names through a groundbreaking deal that should allow them to "sleep soundly." Lloyd's Names are individuals who formerly underwrote the insurance market's policies.

The GBP3.8 billion deal with Berkshire Hathaway insurance vehicle is being structured in such a way as to end uncertainty faced by Names that they could have to pay out for future claims on the London market.

Jill Treanor writes in Saturday's Guardian:

The Names -- wealthy people, including celebrities, who suffered painful losses in the early 1990s - may even receive a payout as a result of the complex transaction with Equitas, the insurance vehicle set up as part of the Lloyd's rescue plan in 1996.

Scott Moser, chief executive of Equitas, said: "Over the last 10 years what Names have said most often is 'I just want to sleep easy'. We think we have just bought them the world's best mattress."

Hugh Stevenson, chairman of Equitas, added: "If, as we hope, the transfer of liabilities from the reinsured Names is achieved, they will no longer have any liability whatsoever under policies reinsured by Equitas. They have achieved finality and will be able to sleep soundly knowing that this chapter is closed".

According to Lloyd's, the average age of a Name is now 78. So you know these folks have been eager to get something like this done.

Forgive me for using the old "win-win" term to describe this deal.

But this deal looks good for the Names and Equitas. They look to be freed of any liability and receive up to GBP150 million (before transaction costs).

And it looks good for Buffett and Berkshire Hathaway. Berkshire will now manage Equitas and receive GBP358 million in return for providing the Names with an additional GBP3 billion of reinsurance cover. Buffett thinks Berkshire will fully assume the liabilities and assets by 2009.

October 20, 2006

David Winters

Courtesy of VInvesting comes this article about David Winters, who left Franklin Mutual Series to found his own firm Wintergreen Advisors:

David J. Winters says he wants his associates at Wintergreen Advisers in Mountain Lakes to be so content that they "tap-dance to work." (He credits Warren Buffett with that remark, describing how much fun he has.)

And these days, it's very clear, Winters is tap-dancing to work.

His new fund, Wintergreen (WGRNX), started last October, is up slightly more than 9 percent -- about what the market has done but with far less risk. (Wintergreen has 25 percent of its $900 million in assets in cash.)

The article reports that, as of June 30, the Wintergreen Fund had 26.8% of its assets in the US, 12.1% in Hong Kong, 7.8% in the UK, 7.5% in Japan and 6% in Switzerland. It had smaller portfolio holdings in Canada, Germany, Malaysia, South Korea, Denmark, Mexico and Sweden.

The fund's top 10 holdings:

Consolidated-Tomoko Land (7.9%)
Japan Tobacco (7.5%)
Jardine Matheson Holdings (5.3%)
Weyerhaeser Co. (3.9%)
Reynolds American (3.9%)
Imperial Tobacco Group (3.8%)
HSBC Holdings (3.7%)
Henkel (2.9%)
Anglo American (2.7%)
Swatch Group (2.6%)

October 18, 2006

Rick Wagoner, Corporate America's "Comeback Kid"

Paul Ingrassia, former Dow Jones Detroit bureau chief, writes an opinion piece for The Wall Street Journal on the failed alliance talks between General Motors (GM/NYSE) and Nissan-Renault:

Rick Wagoner, the CEO of General Motors, has to be corporate America's Comeback Kid. But after a dramatic week in the battle to reshape GM and the global auto industry, Las Vegas billionaire Kirk Kerkorian -- GM's largest individual shareholder and Mr. Wagoner's nemesis -- might still hold a winning hand.

Ingrassia paints two scenarios of how things could work out:

First is that Wagoner succeeds in producing a durable turnaround. Kerkorian wouldn't be rid of Wagoner, but would be more than content with seeing his $1.6 billion investment in GM more double.

Ingrassia writes that Wagoner claims that he's cut $9 billion from GM's structural costs. And that if half that amount flows to GM's bottom line, it amounts to $8 per GM share:

Using a conservative price-earnings ratio of eight (half that of the broad stock market), General Motors shares should be selling for $64 apiece -- more than double the average amount that Mr. Kerkorian paid for his GM shares. Thus if Mr. Wagoner is right, Mr. Kerkorian stands to make a killing, though not quite as much as the $3 billion profit he pocketed from his timely investment in Chrysler in the early 1990s.

The second scenario is that GM's turnaround stalls or isn't real, and this becomes evident over the next year. This is when Kerkorian renews his campaign for change. Back to Ingrassia:

Whether Mr. Kerkorian waits around for either scenario to unfold is unclear. The billionaire doesn't have to rush to judgment -- except that he happens to be 89 years old. If he chooses to sell part of his 9.9% stake in GM, he'd be positioned to profit if the stock goes up, or to repurchase the shares at a lower price if their price falls.

The excellent article ends with this:

This is a high-stakes poker game among rich and powerful men to control and shape one of the world's largest and most visible industries -- and one that tugs at emotions ranging from national pride to consumers' desires. Mr. Wagoner has just won a big hand. But the best bet is that the game will continue.

I may be crazy. But my bet is that GM shareholders who bought over the past year and a half will be winners.

October 17, 2006

South Africa: Land of Sad Decay or Stock Market Bargains?

I haven't own any South African-based stocks since DeBeers a few years ago. It got taken over and I made a good return on my investment.

But the country is frequently a favorite of Templeton's Mark Mobius, who earlier this month was quoted as saying he likes the consumer sector there. Several years ago Mobius was raving about the country, saying you could buy "first world companies at third world prices."

Will this continue being the case? My hunch is yes. Yet it's just that -- a hunch.

I'm far from being an expert on South Africa. And you have to worry when reading Rian Malan's feature piece in the latest Spectator. Malan is a native of the country who wrote the highly-acclaimed book, My Traitor's Heart, some years ago.

His Spectator article is "South Africa: Not Civil War But Sad Decay":

Now, almost overnight, we have come to the dismaying realisation that much around us is rotten. Nearly half our provinces and municipalities are said to be on the verge of collapse. A murderous succession dispute has broken out in the ruling African National Congress. Our Auditor–General reportedly has sleepless nights on account of the billions that cannot be properly accounted for. Whites have been moaning about such things for years, but you know you’re in serious trouble when President Thabo Mbeki admits the ‘naked truth’ that his government has been infiltrated by chancers seeking to ‘plunder the people’s resources’.

Let's hope the country doesn't become another Zimbabwe. But that's top-down stuff, at least from an investor's point of view.

For investors, the question is will South Africa still offer up investment opportunities over time? Like I said, my hunch is that it will. Yet what Mark Mobius does there in the future may offer a conclusive answer.

Scaling Back Fairfax Financial

You may remember that I added to my Fairfax Financial (FFH/NYSE) stake on June 26. I boosted my share count at the ridiculously-low price of US$92.

Today I sold those shares for US$145.74 -- a gain of more than 58% in less than four months. The stock closed the day in New York at $148.64.

Fear not, Prem Watsa fans. Fairfax remains a full portfolio position -- accounting for more than 5% of total assets. I still like the management and the company. I simply saw the early summer price plunge below US$100 as a short-term event.

I was right (four months is a short time frame for me). But with loads of people shorting the stock, and with a lot of the stock locked up, we can see wild fluctuations over time.

I usually just go with the flow in those cases. Yet when the stock went south of US$100, I couldn't resist boosting my stake with the expectations of making some easy money.

What's more, it's nice to have something taking my mind off of the recent performance of Media General (MEG/NYSE) and Takefuji Corp. (8564/JP or TAKAF/OTC).  ;-)

3i Among VC Firms Descending on India

A group of venture capital firms from the UK and continental Europe have completed a fact-finding visit to India in their first big show of interest in a market that has been dominated by American companies. That's the subject of a Financial Times report (free MSN Money link here).

Portfolio holding 3i Group (III/LN) is among the firms mentioned:

More than 50 delegates from European companies such as Logitech, 3i, SAP Ventures, Nokia Ventures, Advent Venture Partners and Sofinnova made the trip, said Nish Kotecha of The Indus Entrepreneurs, a business association and one of the organisers of the visit.

Later in the piece:

During the visit, the foreign companies visited New Delhi, Bangalore and Mumbai. They met leading domestic technology companies such as IT outsourcing groups Tata Consultancy Services and Infosys Technologies, as well as smaller participants.

The groups looked at domestic companies in the mobile applications, network infrastructure, e-retailing and e-learning businesses, as well as at outsourcing for their own operations, said Mr Kotecha.

I'll add that one of 3i's competitive advantages is that it specializes in small-to-medium sized deals. How much or how little that turns out to be the case in India, I don't know at this point.

But many of these firms concentrate on mega-sized deals, leaving 3i free to scoop up the best business in an area with less competition. It will be interesting to see if this proves true in India.

October 15, 2006

Growth and Value

LA Times columnist Tom Petruno pens an article on the growth and value camps. A stock can be seen by investors as a growth stock today, then seen as a value stock tomorrow. And then some stocks go through periods where they are claimed by both camps.

He writes:

A common refrain on Wall Street these days is that many big-name growth stocks of the 1990s now are value issues, at least in terms of price-earnings ratios. After badly lagging behind the broader market over the last six years, those stocks are cheap, some assert.

Cases in point: Microsoft Corp. and Intel Corp. are holdings of the Third Avenue Value fund managed by Marty Whitman, one of the pillars of the value-investing discipline. It would have been impossible to imagine Whitman touching most tech stocks in the late 1990s.

But this year, he said, he was able to buy Microsoft and Intel each for less than 15 times annual earnings per share. (He arrives at that P-E ratio by adjusting the stock prices for the per-share value of the companies' balance-sheet cash.) To put that P-E in perspective, the average blue-chip stock in the Standard & Poor's 500 index sells for about 16 times estimated 2006 operating earnings.

Yet Microsoft, Intel and other major tech issues also still qualify as bona fide growth stocks to many fund managers.

I don't own either. I also don't own some other former-growth-only stocks that some think fit as value plays. Wal-Mart comes to mind.

October 14, 2006

Festival of Stocks Reminder

The next edition of the Festival of Stocks begins Monday. It's being hosted by Stock Market Beat.

If you're a regular visitor of this particular Festival, you know it's a great resource of ideas and information relevant to stock investors. I wasn't able to submit an article this time, but no matter. Each previous edition has had great stuff and I'm betting this week will be no different.

So if you've never gotten around to visiting, be sure to make a point of checking it out this week.

October 13, 2006

Warren Buffett's Geiger Counter

I'm not in any of the stocks mentioned at the end of Emil Lee's Motley Fool article, but I do enjoy first several paragraphs:

In 1956, Warren Buffett started a small hedge fund and, over the next decade, trounced the market with a 930% cumulative return, compared to the Dow Jones' 165% return. Keep in mind, this is after fees. Buffett's return, before fees, was 1,600%.    

How was Buffett able to achieve such stellar returns? Charlie Munger once said that he and Warren made their first hundred million or so by running their Geiger counter over everything. By turning over enough rocks, they eventually found hidden treasures lying there for the taking.

More:

After reading Buffett's shareholder letters from those early days, I see that Munger wasn't lying. For example, one of Buffett's largest holdings in the late '50s and early '60s was a company called Sanborn Maps, which eventually became a whopping 35% of Buffet's fund. Amazingly, Sanborn Maps had a securities portfolio worth $65 per share, but the stock sold at $45 per share. The mapping business, although declining, was still profitable, and it had a positive intrinsic value.

Buffett was able to buy up enough stock to gain control of the company and liquidate the securities portfolio, giving him a fabulous return. In essence, Buffett bought a wallet with $100 in it for $60, and not only got to keep the money, but also sell the wallet.

UK Media Stocks

Just a quick glance at the "Current Holdings" menu in the right sidebar tells you that I like media-related stocks. Mine have done relatively well -- except for Media General (MEG/NYSE), of course -- and they're not the pound-the-table bargains they were a while back.

But Matthew Vincent discusses British media stocks in the latest Spectator, so maybe there's some value across the pond:

To be a successful investor in media, therefore, you no longer have to watch the mass market — or, thankfully, its increasingly tedious television channels. You need to look at the bigger picture — which these days is a lot narrower, and downloadable from a website near you. Current stocks to watch are ITV, BSkyB, Centaur Media and one more business publisher, Wilmington.

I don't own any of the stocks mentioned in the article. BSkyB is a holding in the Longleaf Partners International Fund, last I checked.

Reader Comment on Factoring in Special Return of Capital Dividends

Alex, a regular reader of this site, asked this question in the comment section of my post Controlled Greed.com Portfolio Picks Average +10.5% YTD Through Third Quarter of 2006:

"Are you factoring in the special return of capital dividend from USMO in your calculation as the $3 dividend represented about 15% of the stock's price at the time of the dividend?"

My answer was and is that I don't include dividends and payouts when updating this blog's YTD or "Life of the Blog" stock picking performance.

Why? Because it's simpler and quicker for me. What's more, after the market closes on the last trading day of each quarter the WSJ.com has a wrap-up article giving the YTD S&P performance. And that number doesn't include dividends.

Since the S&P is the yardstick most use to measure investment performance, I want to make sure I use an apples-to-apples comparison here. So I use figures for both the S&P and Controlled Greed.com that don't include dividends.

But figures can sometimes be misleading -- and that's certainly the case with portfolio holding USA Mobility (USMO/NASDAQ).

You see, in the YTD post mentioned above, USA Mobility is listed as being down -17.6% through September 30. Yet when we include the special payout Alex asks about, the performance YTD is actually +2.3%.

And the difference gets even more interesting in this position's "Life of the Blog" performance. In the post, Life of the Blog: Controlled Greed.com Portfolio Picks Average +18% Through Third Quarter of 2006, USA Mobility is listed as being down -13.3% since being recommended in August 2005.

But when the special dividends of last December and this past July are included, the position has actually gained +15.2%.

Another holding with substantial payouts is 3i Group (III/LN).

Maybe I should include these special payouts in calculating the performance of the blog's stock picks. (While still leaving out normal dividends.) Then again, I'd rather be guilty of understating my performance than overstating it.

October 12, 2006

Media General Down

The Chairman at MaoXian says some nice things about my blog in this post. He has good-naturedly ribbed me about buying Media General (MEG/NYSE). You see, The Chairman is down on all newspaper stocks.

Media General announced disappointing results -- and the stock was punished. That said, the stock trades relatively thinly. So it doesn't take much selling to see a sharp drop. You could also say, of course, it works the other way round, too.

I didn't listen to the company's conference call. I'll try and listen to it before the weekend.

October 11, 2006

Shareholder Voices Support for Wagoner

General Motors (GM/NYSE) investor TCW Group, Inc., with 7.85 million shares, says it backs Chairman and CEO Rick Wagoner, according to a Bloomberg report in the Chicago Tribune.

This endorsement comes days after JerryYork, an aide to investor Kirk Kerkorian, resigned from GM's board partly over management's rejection of the proposed alliance with Renault and Nissan. He said the board should have formed an independent committee to evaluate the benefits of cooperation.

From the report:

"We invested in GM based on the turnaround management has put in place, with health concessions, a pension freeze, a new vehicle lineup," said analyst Carol Moreno of TCW, which holds 1.4 percent of GM's stock. "It wasn't for Kerkorian, and it wasn't for a strategic alliance or anything like that."

Okay, well, TCW's 1.4% stake probably won't decide any proxy vote showdown. But it's a start. Here's another bit:

Representatives for State Street Corp., Capital Research & Management Co., Brandes Investment Partners LP and Southeastern Asset Management Inc., the rest of GM's five largest shareholders, all declined to comment.

I read a report the other day mentioning that State Street -- GM's largest shareholder -- doesn't vote to overthrow managements. I don't know if that's true or not. Yet slowly, slowly, it looks like the players are declaring their hands.

The Independent Rates 3i a Buy

As much as I love 3i Group (III/LN) and its management, I haven't been adding to my stake since first buying the shares in May 2005.

Maybe I should -- after reading this column in The Independent newspaper:

Private investors with more modest means, but a fancy for private equity, should cast their eye over 3i Group. Shares in Europe's biggest publicly traded buyout specialist change hands on the London Stock Market and are available to all for 967.5p each.

It is a broad-based venture-capital group, running a string of big funds, hunting for bargains among established companies, backing management buyouts and contributing capital early on to technology ventures and growing companies.

Already geographically diverse, it emerged yesterday that 3i wants to deepen its presence in Asia and China by committing up to $200m to oil, gas and power companies there to exploit surging demand.

More:

The company appears in rude health. It raised £627m in the five months to August by sales and flotations, and is poised to close a new €5bn fund. A specialised infrastructure fund may also be in the offing.

Its net asset value - a key measure of whether the shares are cheap or expensive - stands at about 709p per share. With a slew of lucrative exits expected in the coming months, 3i is a buy.

Well, 3i was a MUCH BETTER BUY when it was first recommended here over a year ago. It could be hand for less than net asset value then.

October 10, 2006

York to Address Gabelli Auto Symposium

Mark your calendars for Monday evening, October 30. That's when Jerry York is scheduled to deliver a keynote address at Gabelli & Company's 30th Annual Automotive Aftermarket Symposium at the Mirage Hotel in Las Vegas.

With York having just resigned from the GM board, and with Kirk Kerkorian remaining a major shareholder, the speech is bound to be at least interesting.

I say "at least" because while I doubt sparks will be flying, we may be able get a hint or two of moves being planned by Kerkorian and York.

Most Kerkorian observers think he's going to carry on his fight to restructure GM his way. The fact that York has even agreed to be a keynote speaker at the Gabelli gathering gives credence to that view.

Kiplinger's "Must-Read Bloggers" Article

As you know, the October 2006 issue of Kiplinger's Personal Finance ranks Controlled Greed.com among its list of "must-read" blogs. The article hadn't been available online. But I think you can read the piece here.

The Japan Play

Tom Stevenson writes in the UK's Daily Telegraph about investing in Japan. The end of his piece makes a point made here before:

I share some of Napier's long-term bullishness on Japan for a different reason. The most significant economic event of our times is the secular shift of power from America and Europe back to Asia. The growth in China and India is a process that will take decades to play out.

But the way for an investor to capitalise on that shift is not necessarily by investing in the growth countries themselves. As the local supplier of high-quality, reliable capital goods, Japan is well-placed to ride the investment wave.

That, however, is the long view.

I add that in addition to being a "local supplier of high-quality, reliable goods," Japan also offers emerging players like Mainland China unsurpassed expertise in marketing and selling goods to the West.

October 09, 2006

Mobius: North Korea's Nuclear Test "No Big Deal"

North Korea's announcement that it tested a nuclear weapon is a "sign of desperation'' and declines in Asian stocks following the statement will be short-lived, according to Templeton's Mark Mobius in this Bloomerg report:

"This is actually not a big deal and I don't expect long-term effects for the markets,'' said Mobius, who oversees about $30 billion in emerging-market equities, in an interview. "This is something I have been expecting for quite some time now.''

I agree. I haven't done any buying in Asia since adding to my Takefuji (8564/JP or TAKAF/OTC) position in August.

But if you've got a list of portfolio candidates in the region, events like this or the Thai coup can offer up opportunities to buy -- if stock prices suddenly fall for no other apparent reason.

October 08, 2006

GM

In his letter of resignation from the board of General Motors (GM/NYSE), Jerry York seemed to be laying the groundwork for a future fight to replace some of the company's directors.

York probably thinks he can better serve Kirk Kerkorian as an outsider -- just as he did when Kerkorian tried taking over Chrysler.

So I'm thinking more fireworks are coming.

Plus, York has a big financial incentive to see that GM's shares rise. The Wall Street Journal pointed out over the weekend that York's deal with Kerkorian provides that York will receive about $2.2 million for each point GM shares go up, as measured in mid-2009.

Yet what if I'm wrong -- and Kerkorian exits the GM picture?

Well, the stock would definitely come under short term selling pressure.

But you know I first recommended GM in April 2005 at $26.75 per share. And that was BEFORE Kekorian got in the picture.

I always liked him involved because, as I stated several times, his presence shakes things up. It has to a certain degree already and could do so even more. But investing in GM was never a play on Kerkorian.

If Tracinda Corp. ends up dumping its 9.9% holding, the stock will go down. If so, I anticipate patiently holding my position through any sell off.

Festival of Stocks Reminder

This week's Festival of Stocks is being hosted by Value Discipline. The past editions have all included some great stuff from a variety of bloggers. Be sure to stop by Value Discipline starting Monday and check out the fun.

October 06, 2006

How to Research Foreign Stocks

In How to Buy Stocks Listed on Foreign Exchanges I described how I go about purchasing shares of companies not trading on American exchanges. That brings up the question of how to research these companies.

After all, you need to know about a company and want to own it before executing the trade.

I’ll explain my answer to that question in just a moment. And I’ll say upfront that my answer is one that may prove less than satisfactory to many.

Exactly why will emerge in the following paragraphs.

But let me offer a few caveats before getting started:

First, this post deals with researching foreign (non-US) stocks that trade only on foreign exchanges. Finding information on foreign companies listing on the NYSE is as easy as getting info on the American-based firms that do so. The same is true for many foreign companies on NASDAQ. So this discussion isn’t aimed at those particular foreign stocks.

Second, like my post on buying stocks on foreign exchanges, this is most relevant to individual investors. And for generally the same reasons. Professional money managers and industry insiders reading this blog have analysts or even entire departments devoted to researching these stocks. Or at a minimum, pay big bucks to research services providing this information.

And third, my method for researching these stocks is what works for me and nothing more. You may have a better way of evaluating these companies or accessing such information. If so, great. Just be aware that what works for me may not be suited to your needs.

So here’s what I do. Note that all these have a bit of overlap involved.

Read, Read and Read Some More
That’s critically important for investing in general -- Warren Buffett recently told Charlie Rose during an interview that most of his job involves reading periodicals and annual reports -- and even more so with foreign firms.

When you make a habit of reading, you build a knowledge base to work from. Often without realizing it at the time. You never know when something you read today plants the seed that grows into a payoff tomorrow. Or even several years from now.

I first read about 3i Group in a Financial Times story on the company going public in the 1990s. It became sort of a go-go stock during the tech boom. Then I became aware it was a value stock when Meryl Witmer of Eagle Capital Partners recommended it in a Barron’s Roundtable in January 2005. Regular readers know I bought 3i Group later and it has been a significant contributor to my portfolio.

Reverse Engineering
That’s a method popularized by professional money manager and author John Train. He wrote about it as a way of saving time researching companies by piggybacking on the holdings of top money managers.

Basically, you look at the reported stock holdings of a couple of investment managers you admire. See what they’re buying and begin your research from there. Note I say “begin” -- don’t buy any stock simply because someone owns it.

Use this information as a starting point.

When I saw Marty Whitman, Peter Cundill, Mason Hawkins and the guys from Tweedy Browne all start buying Japanese stocks in the mid-to-late 1990s, I knew there must be a lot of cheap stocks in the country. So that gave me the foundation to work from. They all loved the property and casualty insurers, but there wasn’t a lot of duplication across their portfolios otherwise.

You see, you still have to make up your own mind on which stocks to buy using reverse engineering. After all, your portfolio is your portfolio -- and you have to be the one doing the picking and choosing on what goes in it.

Still, when you discover that top-notch value players are backing up the truck and buying in, say, Japan or the UK, you can avoid wasting time looking for bargains in Germany or Argentina.

So reverse engineering can be a valuable tool in your bargain-hunting arsenal. And here’s something else: every professional money manager worth his or her salt does the exact same thing. They all look at each other’s holdings.

The Internet
Fortunately, the internet makes researching non-US companies much, much easier. And that’s especially true once you’ve got a list of portfolio candidates.

Almost every company now has an English language version of its website, with balance sheet and other financial information. I’m writing this in English, you’re reading it, and that means you read English. The fact that English is the international language of commerce is a huge advantage for us.

That said, foreign company websites -- like those of American firms -- run the gamut from excellent to awful. You’ve also got to take into account that many foreign companies do not present financial data meeting US GAAP accounting standards, and do not file reports as frequently as you might wish. And you’ve got to remember that many foreign managements couldn’t care less about their shareholders.

This may be politically incorrect, but what I’m about to say is generally true. Shareholders get much better treatment in the “Anglo-Saxon” countries -- the UK, Ireland, Canada, Australia, New Zealand and the US. That’s not true in every case, of course. And investing in individual companies is about specific companies, after all. Factor this into your buying decisions.

Google searches can uncover goldmines of information on foreign companies. I do standard web searches and news searches. Again, the quality of what’s found varies widely.

Overlapping from my above emphasis on reading, search for information on WSJ.com, Barrons Online and FT.com. I’ve also found good data and background from Bloomberg and Reuters.

Paid Research
My broker, Charles Schwab, provides good reports and research on companies listed on American exchanges, but very little on firms traded exclusively on foreign exchanges. If you buy foreign stocks through a full service broker like Merrill Lynch, chances are you can get research from them. I don’t know so be sure to ask.

I have purchased research reports on foreign firms in the past. You can find these from Reuters and others through WSJ.com, FT.com  and Yahoo! Finance as well as Reuters itself. I’ve paid US$10 to $25 for this information on specific companies, though I haven’t done this often. You can almost always find what you need somewhere on the web for free, as long as you’re willing to spend enough time looking.

Well, that’s it. That’s how I research foreign stocks not trading on American exchanges. It is not as easy as obtaining information on foreign companies listing in the US -- and that’s why I stated at the outset of this article my answer may be less than satisfactory. But it’s much easier thanks to the internet. And will continue getting easier over time.

October 05, 2006

What's Kekorian's Next Step?

That's the question General Motors (GM/NYSE) shareholders must be asking after hearing that the Nissan-Renault alliance talks have ended.

The statement Kirk Kerkorian's Tracinda Corp. issued later makes it plain he's unhappy.

What will he do now?

Kerkorian can follow any one of three paths:

The first is to sell his GM shares and walk away.

The second is to maintain his GM position and be a truly passive investor, estimating he'll make an acceptable return on his investment over time.

And the third is to ratchet up the pressure on the GM board.

My hunch is that Kerkorian will follow the latter path. Look for him and Jerry York to continue their campaign to convince GM's directors that their turnaround plans are right for the auto company.

If that doesn't work, Kirkorian could wage a more aggressive campaign to replace some members of the board. Remember that earlier this week GM's bylaws were altered making it easier to replace directors.

If you're a regular reader of Controlled Greed.com, you know what I'm going to say next.

And I hate to keep harping on it -- but GM's top six shareholders own most of the stock. I don't know what they think of all this. How many back Wagoner? How many bank Kerkorian? And how many are remaining mum, waiting to see what happens before declaring their support?

I don't know. But I feel certain of two things.

Rick Wagoner and GM management have enough confidence to kill the alliance talks. And Kirk Kerkorian has the history suggesting he won't give up.

The big question is who has the votes?

October 04, 2006

Adding to Mueller Water Products

I bought more Mueller Water Products (MWA/NYSE) today at $14.12 per share. The stock ended Thursday at $14.39.

I first recommended the company in July at $15.88. For the purposes of this blog, the average cost is $15.64.

I saw that Seeking Alpha reported that Jim Cramer has recommended dumping Mueller Water and buying Walter Industries (Walter owns most of Mueller). I don't know any more than that. All I can say is that I'm more than content owning both companies in the portfolio.

Fairfax Suit Takes a Twist

Two months ago, Fairfax Financial (FFH/NYSE) created a stir by filing a US$6-billion lawsuit against several major U.S. hedge funds and a pair of their “shadowy operatives,” alleging they intimidated executives, orchestrated negative analyst reports, and even harassed Prem Watsa's pastor in an effort to take down the company.

Tuesday, one of these "operatives," Spyro Contogouris, added another layer of intrigue to what is already a strange case: In a statement released through his lawyer, he claims he was working on a special assignment for the FBI.

This from an article in the Globe and Mail:

“Without commenting on any specifics, I can confirm that Spyro Contogouris took certain actions with respect to Fairfax arranged by and at the request of the FBI,” Richard Feldman said in an e-mailed statement. “The charges of Fairfax against Contogouris are without merit.” Mr. Contogouris could not be reached for comment. An FBI spokeswoman did not return calls seeking comment.

I'd be keeping an eye on this story even if I wasn't a Fairfax shareholder.

Prem Watsa doesn't seem like the kind of guy who'd go around filing frivolous lawsuits. But that's just my opinion formed at a very long distance.

GM Board Makes it Easier for Shareholders to Remove Directors

The General Motors (GM/NYSE) board of directors met Tuesday to review the status of the company's turnaround and discuss the proposed aliance with Nissan-Renault. Reading this report in The Wall Street Journal, this jumped out at me:

The board also amended the company's bylaws to allow for majority voting in election of directors, a change that had been sought by shareholders at the company's annual meeting earlier this year. The change will make it easier for shareholders to vote directors off the board. Under majority voting, nominees for board seats must receive at least 50% of the votes cast to be elected.

You know from reading this blog that GM's top six shareholders control the majority of the company's stock. Kirk Kerkorian's Tracinda Corp. is one, Mason Hawkins' Southeastern Asset Management is another.

I have no idea if those two are aligned -- or even if any of the top six GM shareholders are "with" Kerkorian. Some news stories have reported Kerkorian as hinting that some are. We'll just have to wait and see.

But the newly-amended GM bylaws make it easier for a shareholder revolt to have an impact.

That's not a prediction, just a fact.

October 03, 2006

Mobius Plays Romania via Austria

Templeton's Mark Mobius is looking at ways to invest in Romania -- which will join the European Union in 2007 -- through Austrian companies. This Reuters report says:

"What we're doing now is going through two companies in Austria that have invested in Romania, particularly for the small cap fund," he said, referring to the new Templeton Emerging Markets Small Cap Fund that was launched on Monday.

One of the Austrian companies in his portfolios is OMV AG, which controls Romanian oil group Petrom. Another company Mobius is looking at is Austrian bank holding company Raiffeisen International, which has been making forays into eastern Europe.

I find it interesting that at age 70, Mobius still travels 200 days out of the year:

Mobius said he has no plans to step down, as he enjoys what he's doing, and that there is no agreement with Templeton to retire at a certain age. Asked if he was slowing down, Mobius said: "I wish I was, it's not working out that way. It looks like there are more plane rides," he said.

"Last week I was in London, next week I'll be in Hong Kong, the week after maybe in Eastern Europe some place," said Mobius, who calls Singapore home.

October 02, 2006

Utah Newspaper Picks Up Kiplinger's Article Placing Controlled Greed Among "Must-Read" Blogs

The Deseret News in Salt Lake City ran an edited version this morning of Kiplinger's article on "must-read" blogs. As you know, Controlled Greed made the list.

Last I checked, Kiplinger's hasn't posted this piece on its website (it's in the October 2006 issue). The Deseret News only mentions this blog in one sentence.

I quoted the entire paragraph from the article in this post a few weeks ago.

Thanks to the Deseret News for picking up the article -- and warm greetings to all readers finding this site through the newspaper.

Takefuji Preparing Takeover Defense

Things may be getting interesting with Takefuji Corp. (8564/JP or TAKAF/OTC). Bloomberg reports the company is considering share buy-backs and selling securities that offer holders the right to buy new shares.

These steps would be an effort to prevent hostile takeovers:

"Mergers and acquisitions, including management buyouts are likely in the consumer finance industry,'' said Yasuto Tsuruta, a managing director at Credit Suisse Group in Tokyo.

Japan's consumer finance companies are considered bid targets after their stocks plunged as the courts pared back interest rates as high as 29 percent and the nation's ruling party drafted a bill to cut charges. The non-bank financial group of the Topix index is down 24 percent this year, making it the worst performer.

I don't know about the selling securities/rights thing. (Details, you know.) But stock repurchases was one of the steps mentioned in my original rationale for buying the stock last April.

I wouldn't mind seeing Takefuji distribute some of its cash hoard to shareholders, among other things. Such as seeing the company getting bought for a fair price:

Two years ago, Takefuji attracted bidders such as Goldman Sachs Group Inc., the second-biggest U.S. securities firm by market value, and Newbridge, an investment arm of Texas-based buyout firm Texas Pacific Group, when the founder complied with a court order to divest to less than 25 percent his family-held stake. Takei was handed a suspended jail sentence in 2004 for ordering illegal wiretaps of journalists.

Takei's death on Aug. 10 at the age of 76 frees the family from the 25 percent limit.

Canadian financier Peter Cundill in June increased his holding in Takefuji for the second time this year to 8.53 percent, making him the largest single shareholder in the lender, regulatory filings showed. The purchases raised investor speculation that Takefuji may become a takeover target again.

Look for Cundill, among others, to pressure Takefuji to take shareholder-friendly action. As long as investors in the company get rewarded, it doesn't matter whether a takeover happens or not.

Controlled Greed.com Portfolio Picks Average +10.5% YTD Through Third Quarter of 2006

As a group, the 17 stocks making up the portfolio’s current holdings have achieved an average gain of 10.5% through the third quarter. That compares to the S&P 500 being up 7% during the same time period. Both figures do not include dividends. Here’s how each of the holdings have performed so far this year:

General Motors +71.3%
Deckers Outdoor +71.3%
Comcast Class A Special +43.3%
DirecTV Group +39.4%
Liberty Media (Liberty Capital/Liberty Interactive) +17.8%
BCE Inc. +17.7%
CBS Class B +10%
Molson Coors Class B +2.9%
3i Group +1.4%
ArmorGroup International +0%
Walter Industries -1.2%
Mueller Waters Products -8%
Fairfax Financial -9.3%
Media General Class A -15.7%
USA Mobility -17.6%
Takefuji Corp. -19.9%
Nikko Cordial ADR -25.5%

GM and Deckers Outdoor have done great so far in 2006. And, yes, they have each gained 71.3% when rounded off. (GM is up 71.26% and Deckers is up 71.32%.)

The media-related stocks are doing well, especially Comcast and DirecTV Group, with the exception of Media General. Telecommunications company BCE Inc. has performed well to be in the portfolio such a short time. 3i Group being up 1.5% is misleading -- the company made a nice payout in July, that’s not included in the performance YTD.

Nikko Cordial ADRs being down more than 25% in 2006 is an example of how deceptive statistics can be. The company’s ADRs are up more than 36% since being recommended last year. So it’s been a winner for the portfolio.

I still like Takefuji over the long term. I never though it would be a big winner right away -- I never think that about any new holding -- but I was hoping it would be dead money until its value is unlocked. I was wrong about that.

ArmorGroup International, Mueller Water Products and Walter Industries are all so new to the portfolio that their being flat, down and down means nothing at this point.

That’s it for now. I’m content with all these holdings, if not the share price performance in every case. Let’s see what happens the rest of the year.

Life of the Blog: Controlled Greed.com Portfolio Picks Average +18% Through Third Quarter of 2006

I’ve made 18 stock purchase recommendations since then launching this blog on April 27, 2005. Here’s how they have each performed from their selection through the third quarter of this year, not including dividends and payouts, listed in the order of being recommended.

  • General Motors was mentioned on 4/29/05 at $26.75. It closed 9/29/06 at $33.26 for a gain of 24.3%.
  • Fairfax Financial was mentioned on 5/3/05 at $132.50. More shares were purchased for an average cost of $123.16.It closed 9/29/06 at $130.11 for a gain of 5.6%.
  • 3i Group was mentioned on 5/17/05 at $15.06 (adjusted for two subsequent reverse stock splits). It closed 9/29/06 at $17.48 for a gain of 16.1%.
  • Nikko Cordial ADR was mentioned on 5/26/05 at $8.64 (adjusted for a 5-for-1 ADR split). It closed 9/29/06 at $11.80 for a gain of 36.6%.
  • Imagistics International was mentioned on 6/30/05 at $26.60. It was bought by Oce, N.V. later in 2005 for $43.00 cash for a gain of 58%.
  • Molson Coors Class B was mentioned on 6/13/05 at $60.35. It closed on 9/29/06 at $68.90 for a gain of 14.2%.
  • DirecTV Group was mentioned on 7/21/05 at $15.50. It closed on 9/29/06 at $19.68 for a gain of 27%.
  • Liberty Media Series A was mentioned on 8/4/05 at $8.52. The company then distributed to shareholders two tracking stocks, Liberty Capital and Liberty Interactive, this year. I view those two as a single position in the portfolio. Capital closed 9/29/06 at $83.57 and Interactive closed at $20.38. This position has gained 9%.
  • USA Mobility was mentioned on 8/24/05 at $26.34. It closed on 9/29/06 at $22.84 for a loss of 13.3%.
  • Comcast Class A Special was mentioned on 11/28/05 at $26.73. It closed on 9/29/06 at $36.81 for a gain of 37.7%.
  • Deckers Outdoor was mentioned on 10/18/05 at $20.92. It closed on 9/29/06 at $47.32 for a gain of 126.2%.
  • CBS Class B was mentioned on 2/16/06 at 25.61. It closed on 9/29/06 at $28.17 for a gain of 10%.
  • Media General Class A was mentioned on 3/21/06 at $47.05. More shares were purchased for an average cost of $44.76. It closed on 9/29/06 at $37.72 for a loss of 15.7%.
  • Takefuji Corp. was mentioned on 4/20/06 at $62.50. More shares were purchased for an average cost of $57.30. It closed on 9/29/06 at $45.91 for a loss of 19.9%.
  • Mueller Water Products Series A was mentioned on 7/19/06 at $15.88. It closed 9/29/06 at $14.61 for a loss of 8%.
  • BCE Inc. was mentioned on 8/6/06 at $23.01. It closed 9/29/06 at $27.09 for a gain of 17.7%.
  • ArmorGroup International was mentioned on 9/7/06 at $1.03. It closed on 9/29/06 at $1.03 for a gain of 0%.
  • Walter Industries was mentioned on 9/27/06 at $43.21. It closed on 9/29/06 at $42.68 for a loss of 1.2%.

In all, the stock picks made on this blog have averaged a gain of 18% during the life of this blog.

Four points need to be made.

First, these are not “annualized” results or year-to-date results. These are simply how the stock picks have performed since being recommended. I will post YTD results next.

Second, these are not “audited” results. They’re just my calculator and me and I’m subject to correction.

Third, as stated, these results do not include dividends and payouts. So the total return for these stocks as a group is a bit more. That’s particularly true for holdings such as 3i Group and USA Mobility, where shareholder payouts are key reasons for owning the stocks.

Fourth, I live in the US so I track my portfolio in US Dollars. Someone following my picks and residing in another country may see results better or worse than mine.

One more thing: regular readers of know I've taken partial profits in Nikko Cordial, Deckers and most recently Comcast.

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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.