Posts related to ‘Value Investing’

The More Focused, and More Opaque, Buffett & Berkshire Hathaway (BRK-A, BRK-B, BNI, UNP, NSC, GS, GE, TIF, HOG, WMT, COP, XOM, WFC, RSG, DOW, ETN, WBC, MCO, WLP, UNH, GSK, SNY, GCI, WPO)

This was an important week for investment guru and billionaire watchers to see which gurus were holding which stocks.  The full public equity holdings of Warren Buffett via Berkshire Hathaway Inc. (NYSE: BRK-A) were particularly of note, particularly with those B shares under “BRK-B” soon to split and giving a chance for even the less astute ranks of Joe Public to own a piece of the Berkshire dream.  Obviously the huge change is via the Burlington Northern Santa Fe Corp. (NYSE: BNI) buyout.  As part of this deal, Buffett is exiting Union Pacific (NYSE: UNP) and exiting Norfolk Southern (NYSE: NSC) stakes of about $600 million and $100 million, respectively, to avoid duplication and internal competition.  The rail transport play now accounts for about one-quarter of the total Berkshire Hathaway entity upon closing. But the less obvious position in that Warren Buffett in 2009 has made it clear that there will be a simpler and probably less “stock-hound” version of Berkshire Hathaway ahead.

Buffett has gone higher up the food chain and is likely to be a creditor now inside or to large institutions.  We have seen this during the crisis.  Buffett negotiated a better deal for Goldman Sachs Group (NYSE: GS) than the US Government was able to get.  Buffett’s preferred stock in Goldman Sachs has a dividend of 10% and is callable at any time at a 10% premium; but Buffett also got warrants to purchase $5 billion of common stock with a strike price of $115.00 per share, exercisable for a five-year term (4 years now), and Buffett would effectively get to pocket $61 per share if he exercised those all today at the market (and with a $2.6 billion warrant profit alone).

The General Electric Co. (NYSE: GE) stake was listed only as 7.77 million shares of common stock (about $125 million now), the same as it has been for quarters.  Yet last year Buffett came to the rescue with a $3 billion of perpetual preferred stock in a private offering with a dividend of 10% and warrants to purchase $3 billion of common stock.  The preferred is callable after 3-years (2 years now) at a 10% premium; the warrants have a strike price of $22.25 and are exercisable for a five-year term (4 years now).
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Posted on: November 19, 2009 – 8:59 am in Activist Investor, Bonds, Buffett, Conglomerates, Dividend, Editor's Picks, Infrastructure, Large Cap Stocks, Mergers and Buy Outs, Oil & Gas, Private Equity, Transports, Value Investing, , , , , , , , , , , , , , , , , , , , , , , ,

Tech Titans Still Have $269 Billion Cash For Deals (MSFT, CSCO, AAPL, GOOG, INTC, HPQ, QCOM, EMC, VMW, YHOO, DELL, ORCL, JAVA, AMZN, EBAY)

The recovery is on and mergers are happening, yet the technology sector has been slow to make deals.  Despite some deals already having taken place from the technology giants and that $260 billion cash balance which was there in the middle of last quarter is even larger now.  The tally for cash by our count is now right around $269 billion.  We looked through the top market caps of technology companies in our 24/7 Wall St. Real-Time 500 and this list is expanded now that some issues have been resolved in all the companies.  The stocks in this group are Microsoft Corporation (NASDAQ: MSFT), Cisco Systems Inc. (NASDAQ: CSCO), Apple Inc. (NASDAQ: AAPL), Google Inc. (NASDAQ: GOOG), Intel Corp. (NASDAQ: INTC), Oracle Corp. (NASDAQ: ORCL), Sun Microsystems Inc. (NASDAQ: JAVA), Hewlett-Packard Company (NYSE: HPQ), QUALCOMM Inc. (NASDAQ: QCOM), EMC Corporation (NYSE: EMC), International Business Machines (NYSE: IBM), Dell Inc. (NASDAQ: DELL), Yahoo! Inc. (NASDAQ: YHOO), Amazon.com Inc. (NASDAQ: AMZN), and eBay Inc. (NASDAQ: EBAY).

These few tech companies with the $269 billion cash that could be deployed for mergers, acquisitions, or the good old dividends are also listed before tallying up credit lines, factoring, debt sales, and other creative financing methods.  We have listed the suppositions and counting methods for each one to illustrate how much is available at each company.
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Posted on: November 10, 2009 – 1:07 pm in Consumer Electronics, Dividend, Editor's Picks, Internet, Large Cap Stocks, Mergers and Buy Outs, PC Companies, Private Equity, Rumors, Semiconductor, Technology Companies, Value Investing, , , , , , , , , , , , , , , , ,

Is Buffett Becoming A Lagging Indicator? (BRK-A)

BuffettImage gates foundationWarren Buffett of Berkshire Hathaway Inc. (NYSE: BRK-A) was out yesterday talking up “enormous progress” that has been made since a year ago.  His comments came from an interview and an opening address at the 4th annual closed-door Lydian Roundtable on the Payments Industry, a gathering of senior executives in the payments space.  Buffett noted the resiliency of the American system, yet he also cautioned that we are not 100% there just yet when it comes to a return of consumer confidence and spending.  Where this gets interesting is that Buffett has been far more timid in 2009 and it is getting hard to not wonder if Buffett is starting to become a lagging economic indicator.  His Berkshire Hathaway stock may or may not confirm this notion, but it has underperformed the market since at least the market recovery began.
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Posted on: October 21, 2009 – 10:18 am in Buffett, ETF, Economy, Value Investing, , ,

IPO Market Showing Concern (MG, TLCR, BSBR, EM, CLNY, RA, FIG, ARI, VITC, ECHO, CPC, GAME, SNDA, CYOU, SOHU, CPIX, OMER, BX)

bull-and-bear-image2It was just in August that practically every single initial public offering was trading above its IPO price.  The market had rallied significantly, and still rallied after that to just this week have a 10,000 handle on the DJIA.  Investors started warming to more risk-based capital, and investment bankers were finally able to get deals done.  Even waves and waves of secondary offerings were able to be absorbed merely by brokers being able to tell clients they could buy stock at an implied discount to the average price over the few days before.  But suddenly, the IPO market has turned out some real dogs with fleas.

Mistra Group (NYSE: MG) priced its offering at $12.50 on October 7.  While it traded as low as $12.17, it has escaped the hangman’s file of ‘busted deals’ as it is now a $13.51 stock.  The one thing that may have helped was that it priced under an initial range of $14 to $16 per share.  Talecris Biotherapeutics Holdings Corp. (NASDAQ: TLCR) also went into the busted category temporarily after hitting a low of $18.01 after a $19.00 pricing.  Fortunately, it is up at $19.97 so is also now out of the hangman’s eyes.  Still, an 8% gain and a 5% gain in this market might leave some investors feeling lonely.  Banco Santander Brasil S.A. (NYSE: BSBR) was a very large IPO of over 500 million shares at an implied $13.40, and this one got out of the “busted IPO” dungeon on Thursday and closed at $13.51 on Friday.  Before Thursday it had spent its 6 prior trading sessions as a busted IPO.

Emdeon Inc. (NYSE: EM) had traded above $18.00 briefly after its IPO priced at $15.50 in August. But now the healthcare revenue and payment cycle management solutions provider, which is supposed to be a healthcare winner ahead, closed down at $15.35 on Friday  and had been slightly lower during the week.  This was effectively a re-IPO as Emdeon had been public before after General Atlantic Partners acquired it and it also received an investment from Hellman & Friedman. It also has ties to James Clark, the Netscape founder and was part of Healtheon.

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Posted on: October 17, 2009 – 8:45 am in ADR, Biotech, Business Services, China, Editor's Picks, Entertainment, IPOs, Mergers and Buy Outs, Private Equity, REIT, Secondary Offering, Trading Alert, Value Investing, , , , , , , , , , , , , , , , , ,

Stocks That Missed the Rally (ABT, MO, AWK, BKC, ENER, GENZ, KR, ORB, WMT, LEAP, PCS)

Here we are going into yet another earnings season.  We saw Monday how the market has rallied significantly from the March lows and the major indexes are even up in positive territory for the 2009 calendar.  The DJIA is up 51% from its absolute lows of March, and the S&P 500 has rallied more than 61% from its absolute lows in March.  If you look at the December 31, 2008 closing bell levels, the DJIA is now up about 12.75% and the S&P 500 is now up more than 19% year-to-date.

But almost as always, there are still some key very large and/or very active stocks which have not recovered anywhere close to the same amounts with the overall stock markets.  Some of these lagging stocks are Abbott Laboratories (NYSE: ABT), Altria Group Inc. (NYSE: MO), American Water Works Company, Inc. (NYSE: AWK), Burger King Holdings Inc. (NYSE: BKC), Energy Conversion Devices, Inc. (NASDAQ: ENER), Genzyme Corp. (NASDAQ: GENZ), Kroger Co. (NYSE: KR), Orbital Sciences Corp. (NYSE: ORB) and Wal-Mart Stores Inc. (NYSE: WMT).  Two similar situation stocks that are Leap Wireless International Inc. (NASDAQ: LEAP) and MetroPCS Communications Inc. (NYSE: PCS).  We wanted to explore the forward values and relative performance, and the consensus estimates based upon Thomson Reuters data.  Only two of these stocks have market capitalization rates under $1 billion, and almost all are very actively traded and well known in their sectors.
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Posted on: October 12, 2009 – 5:03 pm in Biotech, Charts, Consumer Goods, Defensive Stocks, Dividend, Editor's Picks, Retail, Utilities, Value Investing, Water, , , , , , , , , , ,

Tech Titans Holding $260 Billion In Cash (DELL, PER, ORCL, JAVA, MSFT, AAPL, IBM, GOOG, CSCO, INTC, HPQ, QCOM, EMC, YHOO)

The economy is obviously getting better, so long as you are not one of the unemployed or about to lose your job.  Now with more than a 50% rally from the March lows and a Dow Jones Industrial Average challenging the 10,000 level, suddenly everyone wants to put on their investment banker hats again and look for buyers and buyout candidates after deals are announced.  This week’s Dell Inc. (NASDAQ: DELL) deal for Perot Systems Corp. (NASDAQ: PER) was a $3.9 billion acquisition versus $12.7 billion in cash and equivalents held at the end of the quarter.  The Oracle Corp. (NASDAQ: ORCL) deal for Sun Microsystems Inc. (NASDAQ: JAVA) is valued at $7.4 billion, or $5.6 billion net of Sun’s cash and debt.  We went back through our list from September 2, 2009 where we noted that outside of the financials  in the 20 largest US companies had a cash hoard of $335 billion that could be used for mergers and acquisitions, and that is not accounting for lines of credit, stock or debt that could be sold, and other means of financing a deal.  While nowhere near all of the cash will ever be used, many companies could pay big dividends before any tax changes.

So we wanted to look through the technology sector and after we looked through the top 100 markets caps in our 24/7 Wall St. Real-Time 500 we added a few new additions in the tech sector that still had over $5 billion in cash.  Out if the $335 billion from those in the top twenty, we broke out Microsoft Corporation (NASDAQ: MSFT), International Business Machines (NYSE: IBM), Apple Inc. (NASDAQ: AAPL), Google Inc. (NASDAQ: GOOG), Cisco Systems Inc. (NASDAQ: CSCO), Intel Corp. (NASDAQ: INTC), Oracle Corp. (NASDAQ: ORCL).  Even after a huge rally, $335 billion and then some could go a very long way for strategic and bolt-on acquisitions as a positioning strategy for the next decade.  Now, going further down the list of the top 100 companies with $5 billion or more in cash from tech companies alone adds in Hewlett-Packard Company (NYSE: HPQ), QUALCOMM Inc. (NASDAQ: QCOM), EMC Corporation (NYSE: EMC), and Yahoo! Inc. (NASDAQ: YHOO). When we tally up all the cash, there is over $260 billion available from these few tech companies that could be deployed for mergers, acquisitions, or the good old dividends.  Again, that is before tallying up credit lines, factoring, debt sales, and other financing methods.
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Posted on: September 25, 2009 – 6:41 am in Consumer Electronics, Dividend, Editor's Picks, Internet, Large Cap Stocks, Mergers and Buy Outs, PC Companies, Private Equity, Rumors, Semiconductor, Software, Technology Companies, Value Investing, , , , , , , , , , , , , ,

Merger Stocks With Significant Arbitrage (CYCL, T, HNBC, FNFG, PCAP, PSEC, JAVA, ORCL, VM, S, DT, IPCS)

Broken Money Merger ImageDespite the notion that times are tough, mergers are still happening.  If you look back at what we noted, the top 20 companies by market cap had over $335 billion in raw cash that could be used for acquisitions and dividends.  Two of those are in deals noted herein.  We are seeing some significant merger-arbitrage spreads in five of the existing mergers that are currently in the pipe.  These deals are as follows:

  • Centennial Communications Corp. (NASDAQ: CYCL) by AT&T Inc. (NYSE: T);
  • Harleysville National Corp. (NASDAQ: HNBC) by First Niagara Financial Group (NASDAQ: FNFG);
  • Patriot Capital Funding Inc. (NASDAQ: PCAP) by Prospect Capital Corp. (NASDAQ: PSEC);
  • Sun Microsystems Inc. (NASDAQ: JAVA) by Oracle Corp. (NASDAQ: ORCL);
  • Virgin Mobile USA Inc. (NYSE: VM) by Sprint Nextel Corp (NYSE: S).

We have provided specific background and added in some color to highlight the risks and chances of closure of each deal.  There are some significant opportunities here in some of these deals, and some significant risks in others.
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Posted on: September 18, 2009 – 11:38 am in Activist Investor, Banking, Dividend, Editor's Picks, Insider Activity, Mergers and Buy Outs, Telecom, Value Investing, , , , , , , , , , , ,

The Lame Blame on Short-Termism

Bull and Bear ImageThere is a very silly notion being brought to you by the Aspen Institute Business & Society Program’s Corporate Values Strategy Group and what is admittedly a rather impressive list of names joining it. It is a call to end “Short-Termism” in the financial markets.  Imagine a long-term financial utopia where investors did not have to trouble themselves with the day in and day out wranglings of the stock market or the economy.

Imagine if quarterly earnings, monthly same-store-sales, quarterly or annual guidance, key turns in the demand cycle, interruptions or obsolescence of a business model and other issues were just able to be smoothed over.  Now imagine investing in this sort of a climate.  This idea sounds great on paper and probably looks great on economic models and charts that are the basis for the notion because it goes along with the current theme of thinking for the long-haul and doing what is best for everyone else.  The problem is that this is the most silly and perhaps dangerous notion for the public to embrace.  This is a path for investors large and small to get drummed, slapped, duped, discouraged and a few other things we decided not to print.
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Posted on: September 9, 2009 – 12:10 pm in Accounting, Activist Investor, Brokerage Firms, Buffett, Economy, Editor's Picks, Exchange News, Labor & Unions, Regulation, Research, Shareholder Issues, Utilities, Value Investing, , , , , , ,

Can Verizon Raise Dividend Indefinitely? (VZ, T)

Verizon LogoVerizon Communications Inc. (NYSE: VZ) did not immediately rise despite the announcement from the company that it was raising its quarterly dividend.  Most dividend hikes do not raise the price of stocks immediately, but this 3+% rise in the dividend is an interesting one because this is the third straight year that the company has raised its dividend.  The new dividend is $0.475 per share per quarter,  up from a $0.46 dividend for the last four quarters and a $0.43 dividend before that.

Some may point out that this is actually the smallest dividend hike compared to the two prior dividend hikes.  Frankly, in today’s business and economic climate that is a whiners’ argument that is no different than lottery ticket winners complaining about all the taxes they will have to pay.  What we want to see is how much it can grow down the road.   And just as importantly, we wanted to see how this stacks up against rival AT&T Inc. (NYSE: T) and its dividend history and the future dividends.
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Posted on: September 3, 2009 – 2:30 pm in Defensive Stocks, Dividend, Telecom, Utilities, Value Investing, ,

M&A: America’s Top Companies Hold $335 Billion Cash (XOM, MSFT, JNJ, PG, BRK-A, IBM, T, AAPL, GOOG, CVX, CSCO, KO, INTC, ORCL, BAC, WFC, JPM, GE, PFE)

Money Stack ImageNow that we are out of the woods in the crash scenario, assuming this week is no ill omen, investors may want to know which of the big companies would start to deploy their billions and billions of dollars in cash for large mergers or strategic bolt-on acquisitions. In all of these companies, we are not taking the long-term or short-term debt obligations into account.  This is merely the cash, cash equivalents, and the long-term investments listed on the books.

But as these are the biggest companies in the world with what should be credible balance sheets (in most cases anyhow), we are also including a second combined figure for “receivables and inventories” for a few of these companies to show what the firms could use for additional sources of capital…. These figures do not include untapped credit lines and shelf registrations which could amount to untold billions more.  Because of this calculation, our figures may differ slightly from what companies have listed  as cash and equivalents.

Can all of this cash go for mergers?  What about for dividends?  No way.  But a large portion of it could be used for mergers and buyouts under the right circumstances.  We removed the companies which are either permanently out of the game of M&A or those which are temporarily out of it.  But of the fourteen mega-caps (over $100 billion in market cap) which we did cover, you would be shocked at the cash balance these companies are sitting on without even considering the total cumulative effect of credit lines, inventories, receivables, and open shelf registrations.  The first total cash figure comes to a whopping $335 billion.  This number is far more if you count the companies with exceptions.

These major companies broken down by cash balance and what sort of merger these could consider are Exxon Mobil Corp. (NYSE: XOM), Microsoft Corporation (NASDAQ: MSFT), Johnson & Johnson (NYSE: JNJ), Procter & Gamble Co. (NYSE: PG), Berkshire Hathaway Inc. (NYSE: BRK-A), International Business Machines (NYSE: IBM), AT&T Inc. (NYSE: T), Apple Inc. (NASDAQ: AAPL), Google Inc. (NASDAQ: GOOG), Chevron Corporation (NYSE: CVX), Cisco Systems Inc. (NASDAQ: CSCO), Intel Corp. (NASDAQ: INTC), Oracle Corp. (NASDAQ: ORCL).  Even after a huge rally, $335 billion and then some could go a very long way.
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Posted on: September 2, 2009 – 5:05 pm in Buffett, Conglomerates, Dividend, Editor's Picks, Large Cap Stocks, Mergers and Buy Outs, Oil & Gas, Private Equity, Rumors, Stock Buybacks, Technology Companies, Value Investing, , , , , , , , , , , , , , , , , , ,

Whitman & Third Avenue Launch Focus Credit Fund (TFCVX, TFCIX, TAVFX)

Bull and Bear ImageIf you do not know M.J. Whitman or the Third Avenue Management Inc. family of mutual funds, then you are probably not a value investor.  Whitman and his team have been perhaps some of the deepest value investors for decades on Wall Street.  And now the fund group is launching a new fund called the Third Avenue Focused Credit Fund.   There will be two classes of shares: the investor class shares will trade under the ticker ‘TFCVX’ and the institutional class will trade under the ticker ‘TFCIX.’
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Posted on: August 31, 2009 – 10:29 am in Mutual Funds, Value Investing, , ,

When Key Biotechs Have Low P/E’s & Value Screens (AMGN, BIIB, CEPH, CBST, GENZ, PDLI)

Biotech ImageIt usually takes an event or a series of events for biotech stocks to ever look cheap compared to the overall market or even to sub-sectors within health care.  They generally trade at higher multiples of revenues and with high P/E ratios, assuming they even have real sales-generated revenues and earnings.  But in today’s climate there are many of the large key biotech stocks that are now trading with market-discounts on the P/E ratios and on multiples of revenues as valuation metrics.  We ran a full screen for BioHealthInvestor.com and some of the key names that came up with low P/E and revenue multiples were Amgen Inc. (NASDAQ: AMGN), Biogen Idec Inc. (NASDAQ: BIIB), Cephalon Inc. (NASDAQ: CEPH), Cubist Pharmaceuticals Inc. (NASDAQ: CBST), Genzyme Corporation (NASDAQ: GENZ), and PDL BioPharma, Inc. (NASDAQ: PDLI).

There are generally some reasons that have gotten these to cheap screening levels, but some of these are showing significant value for a sector that usually commands a high-premium to most sectors.  Amgen has recovered substantially from its woes, and Biogen has as well.  Genzyme’s troubles allowed it to make the screen with some key caveats, and the valuation screens elsewhere showed that Cephalon, Cubist, and PDL are worth a look.  All of these companies were also well above our screening threshold of $400 million in market cap and average volume of 250,000 shares or more.  These all came in above $1 billion in market cap and most never see under 1 million shares per day in average volume.

The full story is available at BioHealthInvestor.com.

-The 24/7 Wall Street Team

Posted on: August 24, 2009 – 9:54 am in Biotech, Drug companies, Value Investing, , , , , ,

Is There Value Left In Eastman Kodak? (EK)

burning-money-picThis morning we started seeing increased trading activity in shares of the long-troubled photo giant Eastman Kodak Co. (NYSE: EK).  Then came the option alerts along with the doubling volume alert from VSInvestor.com.  Technically, this stock started to stabilize on Friday, then had a strong day yesterday, and today exploded with a 22% gain.  This move that took it to $4.00 has shares up more than 35% from the lows of last week.  We do not want to spend too much time addressing the rumor mill, but what we did want to look at was what sort of value there is here.  Or isn’t…
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Posted on: August 4, 2009 – 2:52 pm in Consumer Goods, Management Change, Rumors, Trading Alert, Turnarounds, Value Investing,

More Stocks For Buffett To Unload (BRK-A, MCO, COP, CEG, GCI, WPO, MTB, WBC)

Buffett ImageHow frequently has Warren Buffett  been bashed by the media over Berkshire Hathaway Inc.’s  (NYSE: BRK-A) lackluster performance ?  What was interesting to see is his stake being lowered in Moody’s Corp. (NYSE: MCO).  The only thing that was surprising to us was that it took the Oracle of Omaha this long to begin selling these shares.  Because Buffett is such a large stakeholder, we do expect that he’ll always hold some shares.  Conversely, we think he’ll continue to lighten up his stake in Moody’s.  Along those lines, we reviewed Buffett’s holdings and found several more stocks that he might want to consider selling some or all of his stake.

Some of these positions could include ConocoPhillips (NYSE: COP), Constellation Energy Group, Inc. (NYSE: CEG), Gannett Co. Inc. (NYSE: GCI), Washington Post Co. (NYSE: WPO), M&T Bank Corp. (NYSE: MTB) and WABCO Holdings (NYSE: WBC).  There are others, such as his stakes in drug and health care sectors that could have been mentioned, but those big directional bets may have to wait until after health care reform is enacted.   As you will see, we listed the reasons that Buffett should or could cut the stakes.
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Posted on: July 27, 2009 – 11:48 am in Activist Investor, Buffett, Insider Activity, Value Investing, , , , , , , ,

Can A New Marketing Head Revive NutriSystem? (NTRI)

NutriSystem, Inc. (NASDAQ: NTRI) is well known as the weight management and weight loss company that delivers specially designed food in bulk.   You have seen its  commercials on TV.  Now the company is naming a new Chief Marketing Officer.  This might be noise at most companies, but for a company such as NutriSystem the marketing position is perhaps one of the most important for the future of the company.  This comes on the heels of a long period where this went from a growth story to a contraction and value story, and what the company recently called soft consumer spending  in 2009.
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Posted on: June 26, 2009 – 8:49 am in Consumer Goods, Food, Management Change, Retail, Value Investing,

Buying/Selling Berkshire Hathaway The Cheap Way: Stock Options (BRK.B, BRK.A)

Buffett ImageAdmittedly, this almost feels strange.  Before this week there have not been any stock options for Berkshire Hathaway, Inc. (NYSE: BRK-A) (NYSE: BRK-B).  We received word from the CBOE that this is now no longer the case as there will be CBOE-listed stock options in the Class-B shares of Berkshire Hathaway Inc.  There will not be options on the much higher-priced A shares, but what we find interesting is that when share prices get very high or when a stock is not that liquid it seems that traders and investors alike flock to stock options to get exposure rather than using their full cash to buy the stock.
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Posted on: June 19, 2009 – 10:19 am in Buffett, Options, Trading Alert, Value Investing, ,

At $70 Oil, Major Oil Stocks Still Look Cheap (COP, XOM, CVX, MUR, PBR, PTR, VLO)

oil-well-image1We keep getting asked a single question from readers and from our own industry and professional contacts: Are Oil Stocks Cheap? There is a very simple answer in today’s markets: Oil stocks look very cheap (if oil is going to stay anywhere near $70.00).  Some of these are our top picks and some are incidental, but the reviewed stocks are ConocoPhillips (NYSE: COP), Exxon Mobil Corp. (NYSE: XOM), Chevron Corp. (NYSE: CVX), Murphy Oil Corporation (NYSE: MUR), Petroleo Brasileiro (NYSE: PBR), PetroChina Co. Ltd. (NYSE: PTR) and Valero Energy Corp. (NYSE: VLO).  By our measure, some of these major integrated oil and exploration and production stocks are undervalued by 10% to 25%.  Some may be even more undervalued than that in the large-cap and super-cap arenas.

Answering any question of whether a stock or any instrument is cheap does actually require a crystal ball that sees the future for it to be certain beyond a snapshot in time, but if oil stays around these levels then many of the major oil stocks still seem to have more room to run up.  Dare we call this value investing?  This is not a review of every single sector in the oil patch, as we are reviewing these stocks  in groups.
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Posted on: June 12, 2009 – 5:15 am in ADR, Buffett, Emerging Markets, Oil & Gas, Value Investing, , , , , , ,

Unusual Dividend Tracking (CAT, CLX, MSFT, TGT, TSCM, VMC, ACAS, IAF)

Money Stack ImageDividends in general are used as the historic underlying measurement of companies and their abilities to stay profitable at current levels.  Today and last night we have seen some rather unusual dividend news or “in addition to the dividend news” from the likes of Caterpillar Inc. (NYSE: CAT), Clorox Co. (NYSE: CLX), Microsoft Corp. (NASDAQ: MSFT), Target Corp. (NYSE: TGT), TheStreet.com, Inc. (NASDAQ: TSCM), and Vulcan Materials Co. (NYSE: VMC).  American Capital Ltd. (NASDAQ: ACAS) takes the cake for unusual dividends, and the payout at the Australia Equity Fund Inc. (AMEX: IAF) closed-end fund also borders one the unusual.

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Posted on: June 11, 2009 – 11:08 am in Dividend, Shareholder Issues, Value Investing, , , , , , , ,

360-Degree Long & Short Value Review of Hansen (HANS, KO)

Burning Money PicMoney Stack PicHansen Natural Corp. (NASDAQ: HANS) was one of the most unusual stealth blow-ups of Friday.  If you were not paying attention to the comments from the annual shareholder meeting then you may not have had any reason to believe that it was in for a bad day.  Shares rose from just north of $30 since the March rally to a peak of $44 in mid-May.  And then the stock started selling off.  Before June started it even broke its 50-day moving average.  Guess where shares closed Friday? $32.36, down about 11.5% on more than five-times volume, and the 200-day moving average is $32.12.
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Posted on: June 7, 2009 – 10:17 am in Food, Trading Alert, Value Investing

Refiners’ Second Take: Valero’s Risk of Irreparable Harm (VLO, MRO, HES, TSO, SUN, TOT, VSUNQ)

Refinery ImageValero Energy Corp. (NYSE: VLO) may have caused some irreparable harm to itself and to shareholders this week.  Losing money is just not something that the investing public was ready to stomach.  Dumping news of a large secondary offering right on top of projecting a loss was no different than pouring salt and peroxide on your kid’s cut hand when he wasn’t looking.  This has added pressure on other refiners such as Marathon Oil Corporation (NYSE: MRO), Hess Corporation (NYSE: HES), Tesoro Corporation (NYSE: TSO), and Sunoco Inc. (NYSE: SUN).  Valero has always had what always looked like a dirt cheap price to earnings ratio, and now you know why.  This may have put some serious future questions on the sector, even if much of this news is company-specific.
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Posted on: June 4, 2009 – 12:06 pm in Oil & Gas, Secondary Offering, Trading Alert, Value Investing, , , , , , ,