Reading VInvesting, I see this Globe and Mail piece on veteran money managers buying forestry stocks. The sector is battered. And that's why you'll see that many of the "usual suspects" of value investing are mentioned in the article, among them Cundill and Third Avenue.
Regular readers of Controlled Greed.com know that I don't own any of these stocks directly -- and I might be making a mistake in not doing so. I do have indirect (and I'd imagine tiny) exposure through owning Fairfax Financial (FFH/NYSE):
The value hounds are also sniffing at pulp. Fairfax Financial, the insurance conglomerate headed by deep-value buyer Prem Watsa, owns about 20% of SFK Pulp Fund, including convertible debentures. Since hitting bottom at $3.60 in November, SFK's unit price has climbed to more than $4.50, and the income trust has resumed paying monthly distributions.
You can get a British perspective on this sector in the latest Spectator. Where the Globe and Mail article focuses on the sector being beaten up and in need of consolidation, The Spectator's article talks up the notion of China and India fueling future demand for timber products.
That may well prove true. But my experience has been that investing in sound companies in unpopular industries with a long-term view is the way to go. At least for me. So, if I buy any of these stocks, it won't be because of projected Asian growth.
Some examples of this for me include Imagistics International, a reseller of fax machines. Click on its name in the "Closed Positions" menu at the right for the story with that one. The company had a bum future -- fax machines being most of its business -- but got taken over for a nice profit. We've also had a good run in old media companies that were ignored a year or more ago. Think Comcast, CBS, Liberty Media's tracking stocks.
Buy unloved companies, with good finances, and wait. It might take several years for the masses to come to them, but you'll profit from your patience. Of course, some would argue that General Motors (GM/NYSE) and Fairfax don't have good finances. We'll see.
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