reminiscences of a stock operator pdf

Alpha Pro Tech Ltd (APT): Expensive Executives

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.

Last week I discussed Lakeland Industries, Inc (NASDAQ:LAKE) here, a company that manufacturers and markets disposable safety garments and accessories. I have also come across Alpha Pro Tech, Ltd (AMEX:APT) which operates in the same space and is also a microcap (Market Cap around $40m). I was initially attracted to the company by its lack of debt, low P/E (7.3x ex-cash), share repurchase program and low price in relation to NCAV. It wasn’t until I found this note in its recent 10-Q that I gave up investigating further:

Read more

treasury yield percent change since 101104

Ben Bernanke: Taking Credit for the Good and Not the Bad

SeekingDelta.com

With Fed Chairman Ben Bernanke testifying today before the house budget committee let’s take a look back at what has transpired since QE2 was first rumored.

Rumors of QE2 started last August at the Fed’s annual Jackson Hole meeting but didn’t officially start until November. Prior to the official announcement the New York Fed’s Brian Sack had the following to say about the intentions of QE2:

Read more

reminiscences of a stock operator pdf

OPTi Inc. (OPTI): A Patent Troll in Decline

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.

OPTi Inc. (OTC:OPTI) is a Palo Alto, California based company that sold its operating business in 2002 and retained its intellectual property. Since then, the company has been engaged in numerous lawsuits with well known companies in an effort to gain licensing agreements, settlements, and/or jury awards for perceived breaches of its patents. The company has been successful in these pursuits.

NVIDIA

Read more

reminiscences of a stock operator pdf

Battle of Bruce Berkowitz Versus David Einhorn Heats Up

This story for anyone following it never seems to stop. David Einhorn in a famous speech at the Value Investing Congress in New York last year stated that he was short a company called St. Joe, which is a small Real Estate company based in Florida-click here.

For anyone unfamiliar with David Einhorn, he is the of Greenlight Capital, a Value oriented long/short hedge fund. Einhorn’s fund has prodcued 30% gross returns per annum over the past 14 years. Einhorn wrote an excellent book titled Fooling Some of the People All of the Time, A Long Short (and Now Complete) Story, detailing an earlier short of a company named Allied Capital, and Lehman Brothers before their collapse. I will be doing a formal book review on the topic shortly.

Read more

reminiscences of a stock operator pdf

Tejon Ranch Co (TRC): Like St. Joe’s with Berkowitz Upside at Einhorn Prices

By Ben Strubel of Strubel Investment Management

There has been a lot of press lately over St. Joe’s (JOE), a Florida-based real estate development company. Two prominent investors have taken opposite sides of the stock. Leading the short case is hedgefund manager David Einhorn of Greenlight Capital, who contends that the JOE’s land in Florida is no more valuable than cheap rural or timber lands. The chief bull is Bruce Berkowitz of the Fairholme Fund, who believes that the land can be developed into much more valuable real estate. With super investors on either side, other investors are left with a dilemma. If you go long and Einhorn is right, you stand to lose a lot of money. If you go short and Berkowitz is right, you could lose a significant amount of money. Investors are essentially left with a coin flip.

Read more

reminiscences of a stock operator pdf

International Lottery & Totalizator Systems (ITSI)

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.

International Lottery & Totalizator Systems (OTC:ITSI) is a Vista, California based company that supplies and services computized wagering systems for the online lottery and parimutuel racing industries and, through its wholly owned subsidiary, Unisyn Voting Solutions Inc., supplies and services electronic voting machines. The company trades with a market capitalization of just $2.59 million. With no debt or preferred stock and substantial cash, the company’s enterprise value is around negative $1.5 million. The company has NCAV of $0.35 per share, which is 75% higher than its current stock price of $0.20.

Read more

reminiscences of a stock operator pdf

EBITDA: Warren Buffett Versus Everyone Else

I wrote this article today on http://www.gurufocus.com.

It amazes me how widespread the use of EBITDA has become. People try to dress up financial statements with it.

We won’t buy into companies where someone’s talking about EBITDA. If you look at all companies, and split them into companies that use EBITDA as a metric and those that don’t, I suspect you’ll find a lot more fraud in the former group. Look at companies like Wal-Mart, GE and Microsoft — they’ll never use EBITDA in their annual report.

Read more

reminiscences of a stock operator pdf

Business Insider’s Interview With Robert Shiller

http://seekingdelta.wordpress.com

I apologize for the Robert Shiller overload lately but he has done a number of recent interviews and has some interesting things to say. In my opinion, he nails the long-term macro scenarios better than most. The best quote from the interview:

Maybe this is my hubris, but I imagine I could make a lot of money investing — if I put my mind to it and stopped focusing on these big aggregates as I do. But I’m not, I’m an academic and I’ll let other people get rich.  I don’t know what I would do with the money anyway.

He goes on to say he thinks we will see another recession sooner than later:

RS: I think that’s definitely possible because the unemployment rate is very high now and it’s not going down very fast, so I’m still calling for a double-dip. I mean I wish we didn’t have it, but that’s what I always meant. Nobody ever defined double-dip anyway,

Read more

Wall Street

Stock Market Valuation: February 2nd 2011

wall street logo
click to enlarge

I update market valuations on a monthly basis. The point of this article is to measure the stock market based on seven different metrics. This article does not look at the macro picture and try to predict where the economy is headed. It only uses these several metrics which have been very good past indicators of whether the market is fairly valued.

This month I added in GMO’s chart at the bottom. The GMO chart shows what the firm expects different asset classes to return over the next seven years.

I collaborate with two colleagues of mine for some of the data in this article, Doug Short of dshort.com and my friend who runshttp://seekingdelta.wordpress.com. Both are great sites, and I encourage readers to check them out.

As always, I must mention that just because the market is over or undervalued does not mean that future returns will be high or low. From the mid to late 1990s the market was extremely overvalued and equities kept increasing year after year. However, as I note at the end of the article I expect low returns over the next ten years based on current valuations. In addition, individual stocks can be found that will outperform or underperform the market regardless of current valuations.

To see my previous market valuation article from last month click here.

Below are six different market valuation metrics as of February 2nd, 2011:

Read more

reminiscences of a stock operator pdf

How to Save Lives and Lower Health-Care Costs. A Case Study

This is a spectacular article that Dr. Atul Gawande wrote last week in the New Yorker. Dr. Gawande is the author of the best seller The Checklist Manifesto: How to Get Things Right, which is highly recommended by noted value investor, Mohnish Pabrai. This article deals with a fascinating story about how one man was able to lower medical costs by millions of dollars and save peoples lives at a hospital in a low income area.

Below is the article:

If Camden, New Jersey, becomes the first American community to lower its medical costs, it will have a murder to thank. At nine-fifty on a February night in 2001, a twenty-two-year-old black man was shot while driving his Ford Taurus station wagon through a neighborhood on the edge of the Rutgers University campus. The victim lay motionless in the street beside the open door on the driver’s side, as if the car had ejected him. A neighborhood couple, a physical therapist and a volunteer firefighter, approached to see if they could help, but police waved them back.

Read more

reminiscences of a stock operator pdf

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.

Read more

reminiscences of a stock operator pdf

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.

Read more