Hottest links for Monday, March 24th, the late edition. Get our free daily newsletter and never miss a single linkfest. Also, now if you sign up you will get our new e-book on value investing.
Top stories for today are included below. To get your work week started, we’ve got a bubble/no bubble debate on the biotech sector, one pundit who takes a dim view of the concept of price targets, and an in-depth discussion of one of the chapters of Graham’s legendary book The Intelligent Investor.
Hottest Links: Stories
The Defensive Investor and Common Stocks (MG Book Club Chapter Five)
Since the financial crisis, Warren Buffett's Berkshire Hathaway has had significant exposure to financial stocks in its portfolio. Q1 2021 hedge fund letters, conferences and more At the end of March this year, Bank of America accounted for nearly 15% of the conglomerate's vast equity portfolio. Until very recently, Wells Fargo was also a prominent Read More
This is the fifth discussion of the ModernGraham Book Club’s reading of The Intelligent Investor by Benjamin Graham (affiliate link). In this chapter, Graham outlines four basic rules for Defensive Investors to follow, keeping in mind the Defensive Investor is one who is not willing to spend much time on analyzing investment opportunities. [Benjamin Clark, Modern Graham]
Value Investing Contest Winning Entry #1: Balkrishna Industries Ltd.
Balkrishna Industries Limited (NSE:BALKRISIND) (BOM:502355) is a Siyaram Group Company with its history dated back to 1962. From setting up its first manufacturing unit in 1988, it has come a long way in becoming India’s leading exporter of “Off-Highway Tires”. It is an export oriented company with 90% of sales moving to different countries worldwide. [Vishal Khandelwal, Safal Niveshak]
The economists’ models
In a must read book, “The Three Cultures”, the author, Jerome Kagan, writes on the drawback of model used in economics. Whilst much has been written on the subject, what is interesting here are the rich inputs from a number of disciplines. [Chetan Parikh, Capitalideasonline.com]
Bernie Madoff’s Contribution to “The Cost of Investing”
Madoff provided investors with the most costly form of active investing one could ever imagine–fraud! Thanks to Doug Pugliese at SEI Investments for pointing this out–keen eye… [Wesley R. Gray, Turnkey Analyst]
Yes, Biotech is a Bubble. SFW.
The S&P 500 (INDEXSP:.INX)’s biotech stocks are up more than 400% from the March 2009 bottom versus a gain of roughly 180% for the rest of the market. And this does not even include the hundreds of small- and mid-cap biotechs that have gone up even more. [Jousha M Brown, The Reformed Broker] VS The “psycho-economic phenomenon” is a defining characteristic that becomes ingrained in a culture and is related to long-term expectations that cannot be pinned down quantitatively. Let me offer the following chart, and you tell me where there’s a bubble: [Elliot Turner, ValueWalk]
Diamond in the Gold rough
Gold miners have taken a pounding over the last 18 months, and quite rightly. The decade long bull run in the price of gold came abruptly to an end in 2012 with steep declines starting in 2013. [Investing Sidekick]
Herbalife internal consumption: a comment
The debate on Herbalife has come back to the issue of internal consumption – that is how much of Herbalife’s product is consumed by their own distribution network rather than external customers. [John Hempton, Bronte Capital] Related, John Hempton is fed up with with our focus on internal consumption as one of the key legal aspects to the debate about Herbalife’s business model. The Bronte Capital hedge fund manager returns to the argument that both good and bad consumption of Herbalife’s diet shakes by its own army of distributors is possible. [Dan McCrum, FT Alphaville] Related: Herbalife Ltd. (NYSE:HLF) today announced that it has amended and restated its agreement with Carl C. Icahn, Icahn Enterprises LP (NASDAQ:IEP) and certain related entities (collectively the “Icahn Parties”), which beneficially own, in the aggregate, 17,000,000 shares of Herbalife common stock, representing approximately 16.8% of the company’s outstanding shares. [ValueWalk]
Price Targets are Bullshit
Sell-side analysts serve as marketing for brokerage firms’ sales and trading operations. Also, they don’t actually analyze stocks, they analyze companies. This is very helpful for the institutional consumers of this research but the upgrades and downgrades themselves are rarely actionable. [Joshua M Brown, The Reformed Broker]
Impactful information is not always insider and insider Information is not always impactful!
Preet first announced an agreement with 18 investment banks, including JPMorgan Chase & Co. (NYSE:JPM) and Goldman Sachs Group Inc (NYSE:GS), that their equity research analysts would no longer participate in surveys that allowed some of their preferred clients to get advance looks at analyst sentiment changes. [Aswath Damodaran, Musings on Markets]
Pure Style ETFs Win In 5-Year Run
The anniversary of the stock market’s trough in March 2009 got me wondering about how style ETFs have performed during the five-year bullish run following the collapse of Lehman Brothers. [Paul Britt, ETF.com]
Hottest Links: Not the Onion
Italy Furious At Gun-Toting ‘David’ Statue In U.S. Rifle Ad
An advertisement from Illinois-based weapons manufacturer ArmaLite depicting Michelangelo’s sculpture David carrying a AR-50A1 rifle causes outrage in Italy, as the minister of culture threatens legal action. [TIME]