Broyhill Asset Management is out with a new long thesis on Hospira. The value oriented firm goes through a detailed analysis of why they like the stock below is an excerpt followed by the full document in scribd:

Executive Summary from Broyhill Asset Management

Investment professionals have a knack for transforming simple into complex. It is in our DNA. If we don’t spend countless hours building convoluted models, checking every channel and scrutinizing every data point, how else can we justify the exorbitant fees most managers feel entitled to? Worst still, we tend to take our model’s output and blindly accept it without looking under the hood and asking the obvious question. Does this make sense? Investors would do well to remember that greater complexity often drives greater fees. As Ben Graham warned some time ago:

“Mathematics is ordinarily considered as producing precise and dependable results; but in the stock market the more elaborate and abstruse the mathematics the more uncertain and speculative are the conclusions we draw there from. Whenever calculus is brought in, or higher algebra, you could take it as a warning that the operator was trying to substitute theory for experience, and usually also to give to speculation the deceptive guise of investment.”

Simple thinking is frowned upon in the investment world. For our simple minds, this creates opportunity as Wall Street repeatedly overanalyzes and overestimates the impact of short term noise on long term value. Albert Einstein is credited with the statement, “Everything should be made as simple as possible, but not simpler.” In this report, we will outline our investment thesis for shares of Hospira, Inc. as simple as possible. In fact, we think the thesis is so simple that it could be sketched on the back of a napkin. We understand that our napkin might not sit well with “sell side” research analysts whose investment banking clients pay big bucks for elaborate models, so we’ve included greater detail throughout the balance of our report, in addition to our napkin below:

Broyhill Asset Management long thesis below

HSP Thesis May 13