Hottest links for Monday, March 3rd, 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 kick off your work week, we’ve got some great stories, including how you too can be lucky, a wide-moat Asian company, and small cap falling out of favor.
Hottest Links: Stories
How to get Lucky
Is It A Good Time to Be a Stock Picker? Interview With Worm Capital
ValueWalk's Raul Panganiban interviews Eric Markowitz, Director of Research, and Dan Crowley, Director of Portfolio Management, at Worm Capital. In today’s episode they discuss their approach at Worm Capital and where they find opportunities. Q4 2020 hedge fund letters, conferences and more Interview with Worm Capital's Eric Markowitz and Dan Crowley
I don’t remember what exactly changed my opinion. But I do remember that when I read Malcolm Gladwell excellent book Outliers: The story of success, somewhere around 2009, it had significant impact on me. [Contrarian Edge]
The End of Behavioral Finance?
In the piece Thaler not only predicted that we would look back at the 1999 and surrounding Internet craze as the “Great Internet Stock Bubble”, but he also predicted that behavioral finance would become the norm in the field of economics. [Cullen Roche, Pragmatic Capitalism]
Value investors might be better off on vacation
The mood is glum in Valueville these days. Conditions are so depressed that its inhabitants can be spotted packing up their Bloomberg terminals and heading off on extended vacations. [Norm Rothery, The Globe And Mail]
Investment Decisions Should Be Valuation-Based
Investment decisions should be valuation-based because the price you pay is the biggest determinant of your long term return on investment. All investment decisions are based on probability because no one has the ability to accurately forecast the future. This makes optimizing your positive probabilities a key to successful investing. [Ken Faulkenberry, The Arbor Investment Planner]
The Intelligent Investor: The Investor and Inflation (Chapter Two)
This is the third discussion of the ModernGraham Book Club’s reading of The Intelligent Investor by Benjamin Graham (affiliate link). In last week’s discussion, we talked about the first chapter, dealing with the results to be expected by Intelligent Investors.. [Benjamin Clark, Modern Graham]
Can You Guess This Asian Wide-Moat Company?
Our latest monthly issue for the month of March investigates the “Middleby of Asia,” commanding a dominant market share of over 80% in hypermarkets, 50% in chain outlets, 30% in 4- to 5-star hotels in China and an overall 30% in its home market. [Koon Boon Kee, BeyondProxy]
Inside Wall Street’s Frat: Kappa Beta Phi
Wall Street’s secretive fraternity is getting a bit of attention this month, thanks to Kevin Roose’s new “Young Money.” The book, which details the mundane experiences of eight young Wall Street bankers, devotes a chapter to Kappa Beta Phi and its 80th induction dinner in 2012. [Stephen Grocer, MoneyBeat]
Seth Klarman: Fed Created Truman Show Style Faux Economy
Seth Klarman’s fund, which in 2013 had a high of 50% of his portfolio in cash, up from 36% in 2012, posted 2013 returns in the mid-teens consistent with the fund’s nearly 22-year track record. [Mark Melin, ValueWalk]
We analyzed 37 years’ worth of Warren Buffett’s shareholder letters.
This year Buffett used 138 words in his letter he had never used before, including “timid,” “fluctuation,” “Texas-sized,” “geography,” and “soybeans.” In certain years Buffett has grown the letter’s lexicon more than the year before. This year was not one of them. [David Yanofsky, Quartz]
5 Low PEmg Companies for the Enterprising Investor
Enterprising Investors may also be interested in reviewing 5 Undervalued Companies for the Enterprising Investor such as Ford Motor Company (NYSE:F), Capital One Financial Corp. (NYSE:COF), Unum Group (NYSE:UNM) and more, while also conducting further research into the following companies. [Benjamin Clark, Modern Graham]
Small Cap Out of Favor
Aeropostale Inc (NYSE:ARO) stock price is now at 2003 levels. Cash fell to 68 million (10/31/2013) from 100.30million (07/31/2013). Yet an unused 175 million credit is available. [ShadowStock]
QE’s Greatest Beneficiaries
Quantitative easing “worked” for all of us, but it worked much better for some than for others. Its greatest beneficiaries have been, perversely, those who’ve needed its help the very least. [Joshua M Brown, The Reformed Broker]
Buffett Tells Investors to Get Real About EBITDA
The best part about Berkshire Hathaway Inc. (NYSE:BRK.A) (NYSE:BRK.B) CEO Warren Buffett’s annual investor letters is that they always provide some kind of reality check. [Herb Greenberg, Herb On TheStreet]
A China Fraud Dissected: Part 2 AgFeed’s Auditors
In July of 2013, the company filed for Chapter 11 bankruptcy. Lawrence’s story provides the background you’ll need to appreciate what I’m going to talk about next. See Part 1 Milton Webster, AgFeed Audit Committee Member and Whistleblower, on this blog for more on this case. [Francine McKenna, re: The Auditors]
Those Action Levers in the Back Office
Celent’s new report on risk management and the value chain identifies five “action levers” that financial firms, especially those heavily involved in derivatives positions, should consider in the course of navigating the rapids of the present market and regulatory scene. [Christopher Faille, AllAboutAlpha.com]
Do Tim Cook care about the “bloody stock price”?
Tim Cook has got a lot of favorable press for confronting an investor group at the last Apple Inc. (NASDAQ:AAPL) stockholder meeting and telling them that he does not check the “bloody IRR” when he has to do the “right thing”. [Aswath Damodaran, Musings on Markets]
US investors biggest scaredy-cats in the world
A new survey from Schroders, a multinational investing firm that manages $415 billion for clients, shows U.S. investors ranking at the bottom of 25 countries in terms of confidence, with just 37 percent showing a positive view. [Jeff Cox, NetNet]
You shouldn’t buy this stock at any price
Ben Graham advocated that we should always follow a cardinal rule if we truly believe in the value investing philosophy: buy cheap. [David Foulke, Turnkey Analyst]
George Soros Is Not a Gangster
Last week, Forbes released its annual score card of top-earning hedge fund managers. The usual gang was there: Soros, Tepper, Cohen, Paulson, Icahn, Simons, Dalio, Griffin, et. al. That clickbait scorecard — it worked on me — led to a strident column from Gawker, bizarrely titled “Fund Managers Are the Biggest Gangsters of All.” [Barry Ritholtz, BloombergView]
The Great Divide over Market Efficiency
The Noble committee decided to split the economic prize between Eugene Fama and Robert Shiller – and that’s okay. [Clifford Asness and John Liew, Institutional Investor]
Hottest Links: Not The Onion
Koala escapes at zoo, falls asleep before he can do anything interesting
San Diego Zoo staff recovered Mundu, a 2-year-old male koala, after he managed to slip out of his enclosure. Staff spotted Mundu sleeping in the treetops above his enclosure, and they were able to coax him down after the zoo closed. [SmartBrief]