January 2011 - ValueWalk

What You Need to Know About Orders

Tim du Toit is editor and founder of Eurosharelab. On his website he reveals what more than 20 years of equity investment have taught him – sometimes at considerable cost. To discover how you can avoid costly mistakes and enjoy greater profits, sign up for his free newsletter “Investing that makes sense” at www.eurosharelab.com

am sure, especially if you use an internet based stock broker, you have seen or used some of the numerous types of orders you can choose from.

But do you know what they all mean?

And do you know that they can also increase your returns by giving you a better purchase and sale price?

In this article I will give you a quick overview of the different order types and how you can optimally use them.

Sell-Side Incompetence and Conflict of Interest

This is a really funny sell-side report. H/T to my friend Adib of http://adibmotiwala.com for the find.

From Roth Capital:

We are upgrading our rating from Neutral to Buy and increasing our price target from $125 to $150, reflecting multiples of seven times revenue, 30 times free cash flow (FCF), and 71 times price-to-earnings (P/E) on our fiscal-2014 estimate, which is at a significant premium to the peer multiples of our larger software as a service (SaaS) vendors.

World Market Valuation Heat Map

Awesome article by http://seekingdelta.wordpress.com/

Based on data provided by Aswath Damodaran, Professor of Finance at NYU, I have created the following world market valuation heat map. Big thanks to Prof. Damodaran for making this data available to the public.

Who is Better For The Stock Market: Republicans or Democrats?

With the State of The Union earlier this week and the new Congress coming into session earlier this month, I thought it would be interesting to look at politics and stock market returns.

The New York Times ran an op-ed by Tommy McCall on October 14^th 2008 titled Bulls, Bears, Donkeys and Elephants. The article showed data which indicated that the stock market does far better under Democratic Presidents than Republican presidents, using data from 1929.

Heads I win, tails I win

http://gregspeicher.com/

Barron’s article over the weekend on Berkshire Hathaway, “Mr. Moneybags”, highlighted the enormous earnings power of Berkshire Hathaway. According to the article, Berkshire could earn between $12 billion and $13 billion in profits in 2011 and could end the year with as much as $50 billion in cash. The stock looks attractive at a projected 1.15x projected 2011 year-end book value.

Zoran Update: Shareholder Activist as Catalyst

Frank Voisin is a value investor and independent analyst whose site, Frankly Speaking, contains Frank’s investment theses as well as educational material to help investors avoid value traps. Subscribe to Frank’s feed here.

In October, I wrote about Zoran Corporation (NASDAQ:ZRAN), a maker of power supplies and digital imaging equipment that was hitting new 52 week lows.

Exclusive Interview With Charles Rotblut: VP of AAII

click to enlarge

Charles Rotblut is a vice president with the American Association of Individual Investors (AAII). He is the editor of the AAII Journal and helps to manage the Stock Superstars portfolio. Charles is a CFA charter holder and recently authored a book titled Better Good than Lucky: How Savvy Investors Create Fortune with the Risk-Reward Ratio. Charles was kind enough to answer some of my questions.

Thanks so much for your time Charles. I am curious if you can start off with telling us a little bit about your background?

Sure. I started out analyzing privately-held companies and partnerships in the mid-1990s. This involved a lot of onsite visits and careful scrutiny of the financial statements. It was a good way to learn how to be an analyst because there weren’t good comparative valuations and we had to consider what an outside investor would actually be willing to pay. From there, I went to work at INVESTools – a for-profit investment education company, Curian Capital – a money management firm, and Zacks Investment Research – a research firm.

Valuation-Informed Indexing #26:
The Numbers on Your Portfolio Statement Are Wrong!

by Rob Bennett

A fellow on a discussion board who is highly skeptical of Valuation-Informed Indexing made what I had to acknowledge was a good point the other day. I am always going on about how valuations must be taken into account in investing analyses. This fellow (he posts as “GW”) noted that he has been taking some money out of his portfolio to finance a vacation. Vanguard has been willing to pay him the full stated value of his portfolio amount even though Rob Bennett says that we should be marking down stock prices to reflect the reality that today’s P/E10 value is in the low 20s and the fair-value P/E10 value is 15. Do I think that Vanguard should pay him something less than the stated value of his portfolio?

Portfolio Update: My Buys in The Fourth Quarter 2010

In an earlier post I noted my performance for 2010 and how it was calculated. I promised to get to all my buys and sells for the first quarter. I mentioned my gains since inception as 29% from early 08, and 25.85% for 2010. I have ~36 holdings right now. I like diversification but I plan on lowering this number because it is too hard to keep track of all these stocks due to time constraints.

Below I listed my buys for the 4^th quarter of 2010. I will get to sells in a post early this week. I do not have exact numbers from my broker but I have a rough estimate of ~13 return in Q410, almost matching the S&P500’s return for the entire year in one quarter!

Gaming Partners International Corp (GPIC)

Gaming Partners International Corp (NASDAQ:GPIC) is a manufacturer of counterfeit-resistant casino chips enabled with RFID technology. GPIC sells these chips, among other gaming products, to casinos worldwide, with manufacturing in France, Mexico and the United States. Recognizing the growth prospects of gambling in Asia, GPIC will be opening a sales office in Macau in 2011.

David Tepper: No More ‘Free Ride’ But Markets Still Look Good

David Alan Tepper is the founder of Appaloosa Management, which is a $3 billion hedge fund investment firm based in Chatham, N.J., just west of New York City. David Tepper initially became interested in the stock market as a young boy watching his father trade stocks in his hometown of Pittsburgh.

Five investment opportunities – you don’t have time to hunt down, but I do

Have you ever thought of where and how the highest consistent investment returns are achieved?
The answer is surprisingly simple. You have to buy undervalued companies in good financial shape.
That sounds easy enough you may be thinking. But where do I find them?

Over 20 years of investment experience has taught me, you have to look where others don’t…
either because they are too lazy and do not want to do the analysis, or they simply do not know where to look.

In this article I want to show you some of the unusual places I look for investment ideas, what I turned up and what the result were.

Performance Update and Portfolio Data for 2010

I have to block out some information for security reasons.

I opened my joint account with after I got married in 2008. The account was opened officially sometime in early 2008. So far I have been very satisfied with my returns during these turbulent markets. Here are my returns as of 12/31/2010:

2010: 25.85%me 15.06%% (S&P 500)

I wish I had exact numbers for 2009 but unfortunately my broker does not provide them. I spent some time doing the math and estimated a return of 50-60%.

2008 I do not have exact numbers but they were horrendous to say the least.

Since inception 29.95% early 2008 vs. ~-6% S&P 500

Peerless Systems Corp. (PRLS)

Peerless Systems Corp. (NASDAQ:PRLS) licenses imaging and networking technologies for use in printers and multifunctions. In 2008, it sold substantially all of its operating assets to Kyocera-Mita Corp., but retained the intellectual property which it now licenses. The company is trading at a slight (5%) discount to its NCAV, but the interesting story of PRLS relates to its EPV.

Value Investors Don’t Buy Gold, Right? Buffett vs Einhorn

Have you bought gold for your portfolio or at least considered doing so?

If yes, you are in good company as some of the best investors in the world (who stayed away from gold all their investment careers) have bought some.

But if value investors are known for their appetite of high-yielding investments and their desire to “buy a dollar at fifty cents”, is gold an asset that fits into this universe?

+ Load More