I am planning to write more on companies selling below net asset value, liquidation value, tangible asset value, etc. So far I have only written about one of these situations, since it was my only noteworthy idea this year. Even though I have talked about companies in tha past such as Pfizer and Wal-Mart; I would never own shares in these companies because I can find more undervalued companies. I also feel there is much more reward for taking the same low risk approach.
I usually wouldn't buy a lot of any one of these Graham & Dodd companies due to the fact that I could be buying a company that doesn't end up being a good investment. I will say that when I wrote about Pohang Iron & Steel aka POSCO, I was buying a company worth only slightly less than book (about 10%) but was operating under the greatest margins in the international steel industry. I can't prognosticate the future but POSCO still sells at a ridiculous discount in terms of book and EV/Sales. Also management has been very friendly to shareholders. Around the time I wrote that article in January I was buying shares of POSCO everytime I had money to invest. I bought shares four times around the beginning of the year and is by far my largest holding. Since I don't plan to increase my stake in the company for the time being, it makes me feel good writing about it.
Write after I talked about my portfolio last year I liquidated my account except for one company to fund my POSCO purchase. Besides Apple and Chiquita, I didn't feel that my other companies were overvalued but that I could find better value elsewhere. I sold Chiquita after the new WTO tarrifs were announced. This was something I had no control over and had no ability to predict. Also management were cheating and stretching the truth (perhaps lying) to shareholders. When it comes to Apple, I had trouble justifying its valuation. Maybe I was wrong but I want to sleep comfortably knowing my investments are safe. I type in Stock Quotes on Yahoo Finance not to see how much I made or lost but to see any news article about the companies. I spend a good while reading about companies I own and their competition. When it comes to Apple, they may well be a good investment, but I think it is just as likely they will be just an average investment and I strive for above average. I hope for great but strive for above average. I also still own one share of Village Supermarket. I have an emotional connection with this company. I'm going to admit, it's not healthy to let emotions have a say in your investments. I think after talking to the CFO and talking about the company I felt I should still keep one share. If the stock went to 0 (Which I don't see happening), it would hardly effect my portfolio. I still enjoy the annual reports and 10-K's. I might be old fashioned but I requested that all companies send me their reports through the mail. I like print on paper.
Well that's just my thoughts for tonight.
Eric Schleien
zachary
teenmoney
josh4580
Carlton
I was just wondering what people thought of the stock AMD or Advanced Micro Devices. Are they the next Intel? Hp is already offering their chips inside many of their machines and they are shown to be gaining market share in their sector.
I wouldn’t even consider putting a dime into AMD. Intel, even though out of favor in the stock market, is still a much more profitable company. It’s also selling at lower valuations compared to AMD. AMD seems pretty expensive and it has horrible margins and returns on equity and investments. Intel also has been buying back their shares which I see as beneficial to the company since I think Intel is cheap. I would say it would be safe to say that Intel would be a good investment but AMD I have no idea. The last thing you want is to do worse than the risk-free Rate of Return (A US Savings Bond).
When investing, don’t shoot for huge returns. Aim for good returns so you won’t lose money. Atleast that’s my style of investing and it has worked well for me as well as Warren Buffett, Joel Greenblatt, and Benjamin Graham. There aren’t many high growth investors that have been successful for a long period of time.
If you would like to continue this conversation email me at
eric at deepthoughts.tk