Hottest links for Saturday and Sunday October 26th-27th, 2013 the weekend edition on time (see Friday’s edition of hottest links). Get our free daily newsletter (which is being updated currently to make it even better) and never miss a single linkfest.
Top stories for today can be found below. There are a lot of great value investing/behavioral articles out, including some great valuation pieces; Check out some good articles on hedge funds, including an article about a new massive purchase by Howard Marks’ Oaktree Capital; Some notes from a recent investment conference, stay tuned as we are covering four different investment conferences this week; The debate over small caps, Royce Funds explains why there could still be some room for growth in the sector; How much is a Warren Buffett tweet worth? What about one from Carl Icahn? Not even close to one from Justin Bieber; A Man’s house went on fire but he ran back in to heroically save….
Value Investing
Colfax Corporation (CFX) Valuation
OK, so this is another extension of the footnote to the book post. Someone mentioned in the comment section that Colfax Corp (NYSE:CFX) is the younger analog to Danaher Corporation (NYSE:DHR) and it is owned by some Tiger cubs and BDT Capital, a firm run by Byron Trott. (Buffett’s investment banker). [KK, The Brooklyn Investor]
Investing Words of Wisdom (Part 1)
Wise words from great investors… “I will tell you how to become rich. Close the doors. Be fearful when others are greedy. Be greedy when others are fearful.” – Warren Buffett. [Kanwal Sarai, Simply Investing]
7 Key Tips to Value Investing
My early days of investing involved some speculative purchases of Priceline and Kmart. The first one turned out great and inspired a passion for investing. Here’s a look at why that’s important, and some other key tips I’ve mastered over the years. [Benjamin Clark, ModernGraham]
My Investing Mistakes And Lessons That I’ve Learned
This is a list of the most important things that I’ve discovered. Sometimes I have learned these things the hard way. [Glenn Chan]
Notes From Excellence in Investing San Francisco 2013
The 4th annual Excellence in Investing: San Francisco conference took place this week and MarketFolly was there to cover the event. Notes included are of John Burbank III – Passport Capital, Kurt Billick – Bocage Capital, Mick McGuire – Marcato Capital Management, Mason Morfit – ValueAct Capital and more. [Market Folly] Related; More coverage of Excellence in Investing include notes of Michael Moe – Buy Twitter, Malcolm Fairbairn – Buy CF Industries Holdings, Inc. (NYSE:CF), Christopher Lord – Buy tower companies – Crown Castle International Corp. (NYSE:CCI), American Tower Corp (NYSE:AMT), SBA Communications Corporation (NASDAQ:SBAC) and more. [ValueWalk]
Probabilistic Investing
While I don’t think the US is in a bubble it is in the top 10% of valuations, which works as a massive headwind to returns in the 3-10 year period. [Mebane Faber]
Small cap valuations
What to Do with Small Caps?
First is a chart on the historic run of small caps from WisdomTree, then a chart from the amazing Green Book from Leuthold that lays out the valuation argument against small caps relative to the overall market. [Mebane Faber]
Related; The table below shows all calendar years from 1979 to 2012 where GDP Growth was less than 3%, the corresponding performance of the Russell 2000 (INDEXRUSSELL:RUT), the Russell 1000 (INDEXRUSSELL:RUI), and the index performance spread. [TheRoyceFunds]
| Calendar Year | GDP Growth | Russell 2000 Performance |
Russell 1000 Performance |
Russell 2000 Outperformance or Underperformance vs. Russell 1000 |
|---|---|---|---|---|
| 1980 | -0.29% | 38.60% | 31.87% | 6.73% |
| 1981 | 2.54 | 2.03 | -5.10 | 7.13 |
| 1982 | -1.98 | 24.95 | 20.31 | 4.64 |
| 1990 | 1.86 | -19.48 | -4.21 | -15.27 |
| 1991 | -0.26 | 46.04 | 33.04 | 13.00 |
| 1993 | 2.87 | 18.88 | 10.18 | 8.70 |
| 1995 | 2.55 | 28.45 | 37.77 | -9.32 |
| 2001 | 1.09 | 2.49 | -12.45 | 14.94 |
| 2002 | 1.83 | -20.48 | -21.65 | 1.17 |
| 2003 | 2.55 | 47.25 | 29.89 | 17.36 |
| 2006 | 2.66 | 18.37 | 15.46 | 2.91 |
| 2007 | 1.91 | -1.57 | 5.77 | -7.34 |
| 2008 | -0.36 | -33.79 | -37.60 | 3.81 |
| 2009 | -3.11 | 27.17 | 28.43 | -1.26 |
| 2010 | 2.38 | 26.86 | 16.10 | 10.76 |
| 2011 | 1.80 | -4.18 | 1.50 | -5.68 |
| 2012 | 2.21 | 16.35 | 16.42 | -0.07 |
Hedge Funds
Lone Pine To Combine Long-Only Funds
Stephen Mandel Jr.’s Lone Pine Capital is merging its two main long-only equity funds. Lone Cascade and Lone Dragon Pine, according to the Greenwich, Connecticut headge fund firm’s third quarter letter to investors. [Stephen Taub, Institutional Investor’s Alpha]
Some Excerpts from Conatus Capital’s Q3 letter
Conatus Capital Partners rose 3.2 percent net of fees in the third quarter, bringing the fund to a 12.7 percent gain for the year through September. Recent winning stocks include Gulfport Energy Corporation (NASDAQ:GPOR), Pioneer Natural Resources (NYSE:PXD), Facebook Inc (NASDAQ:FB), LinkedIn Corp (NYSE:LNKD) and Amazon.com, Inc. (NASDAQ:AMZN), according to the Oct. 16 letter. Asia stocks Tencent Holdings Ltd (HKG:0700) (OTCMKTS:TCEHY), Ctrip.com International, Ltd. (ADR) (NASDAQ:CTRP), Alibaba.com Limited (HKG:1688) (OTCMKTS:ALBIY) and European equities EADS NV (EPA:EAD) and Volkswagen AG (ETR:VOW) (FRA: VOQ) (OTCMKTS:VLKAY) also performed well. [Lawrence Delevingne, CNBC]
Battle Of The Billionaires Erupts Over Keystone
The brawl is over an upcoming decision by the Obama administration about whether energy company TransCanada Corporation (NYSE:TRP) (TSE:TRP) should be allowed to build a massive oil pipeline, called Keystone XL, that will ship oil sands in Northern Canada to refineries in the Gulf of Mexico. [Lawrence Delevingne, CNBC]
Oaktree Capital Discloses NewPage Stake
Howard Marks’ hedge fund firm Oaktree Capital Group LLC (NYSE:OAK) has filed a 13G with the SEC and disclosed a 15.8% ownership stake in NewPage Holdings with 1,117,192 shares. [Market Folly]
Funds/ETFs
Munis
These Funds Suggest the Muni Bond Fire Sale is Over
iShares S&P Natnl AMT – Free Munpl Bd Fd (NYSEARCA:MUB), the biggest ETF for the $3.7 trillion market, is selling at the smallest discount to fair value since July. Now here’s a year-to-date chart of how SPDR Series Trust (NYSEARCA:HYMB) trades versus fair value. [Brendan Conway, Focus on Funds]
Why Closet Index Trackers Need To Be Regulated
The point of most actively managed investment funds is to beat the market, but in order to beat the market they must in some way be different from the market. [John Kingham, UK Value Investor]
The Great Rotation Has Already Happened in ETF’s
Vanguard Dividend Appreciation ETF (NYSEARCA:VIG), the category leader, has enjoyed $3.2 billion inflows this year, while SPDR S&P Dividend (ETF) (NYSEARCA:SDY) has taken in $1.2 billion. The figure for Vanguard High Dividend Yield ETF (NYSEARCA:VYM) is $1.6 billion. [Climateer Investing]
Could An ETF Price War Get Ugly?
Fidelity launched 10 new passive sector exchange-traded funds — they started trading at 9:30 a.m. — each with a total expense ratio of 0.12% and available commission-free through the company’s brokerage platforms. [Chuck Jaffe, MarketWatch]
Tweet values
Carl Icahn Tweets Aren’t Worth What They Used To Be
After billionaire activist investor Carl Icahn appeared on CNBC for almost an hour to discuss his proposal that Apple Inc. (NASDAQ:AAPL) CEO Tim Cook should initiate a $150 billion share buyback, Miller Tabak chief economic strategist Andrew Wilkinson pointed out in his “chart of the day” that Icahn is not even a top-2o shareholder of Apple. [Matthew Boesler, Business Insider]
Related; Mr. Buffett, valued at more than $58 billion and the second-richest man in the world, according to Forbes, would be worth a mere 13 cents to Twitter, Inc. (TWTR) with his paltry four messages. Meanwhile, Mr. Bieber, No. 9 on Forbes’ Celebrity 100 and the most-followed person on Twitter, could be worth $762.89 thanks to his 24,000 plus tweets. [David Benoit, MoneyBeat]
Misc
What Happens When Wall Street Builds A Rental Empire
Most rental houses in the U.S. are owned by individuals, or small, local businesses. Culpepper’s landlord is part of a new breed: a Wall Street-backed investment company with billions of dollars at its disposal. [Ben Hallman and Jillian Berman, Huffington Post]
When The SEC Does Its Homework
Its not fun being in the government’s crosshairs. But there is comfort in knowing that the then Head of Enforcement at the SEC , Linda Thomsen went to the Nth degree to make sure she knew the smallest details of my case before moving forward ! [Mark Cuban, Blog Maverick] Related; During my interrogation by SEC attorney Jan Folena there were a lot of interesting moments. Some from my viewpoint seemed to make her physically shake. My experience in the witness box was not anywhere near what I expected. Particularly the actions and responses of Ms Folena. [Mark Cuban, Blog Maverick]
Hottest Links: Not The Onion
Georgia man runs into burning home to get beer
A man who walks with a cane was not injured when he ran into a burning Columbus house to recover beer he left inside the house. [Fox News]
