With his usual abundance of wit and shortage of tact, Bill Rempel skewers Kiplinger’s “Must Read” Bloggers List. The skewering is well deserved – and no, not just because neither Bill nor I am on the list. Read the whole post and you’ll see why Kiplinger’s list isn’t what it claims to be.
Warning: Bill’s post is brutally (and hilariously) honest.
By the way, I actually like a few of the blogs on this list (especially Controlled Greed). I also like some of the aggregators (especially Seeking Alpha), although they shouldn’t be on a “Must Read Bloggers” list.
On Friday, Warren Buffett’s Berkshire Hathaway (BRK.B) disclosed a 19% stake in USG (USG). National Indemnity, a subsidiary of Berkshire, acquired nearly 1.13 million shares at prices of $45.90 to $46.10. The total cost of these purchases was approximately $51.2 million.
From the amended 13D:
From August 23, 2006 through October 4, 2006, (National Indemnity) acquired 1,112,900 shares of USG Common Stock through open market purchases. The dates and prices at which those shares were purchased are as follows:
8/23 – 734,700 shares @ $45.90
8/24 – 7,000 shares @ $46.03
10/04 – 371,000 shares @ $46.10
As disclosed in Friday’s filing, Berkshire owns over 17 million shares of USG. At the time this post was written, Berkshire’s (disclosed) stake had a market value of about $854.8 million.
The Making of Berkshire’s Stake
On June 30, shares of USG traded at $72.93 (they had traded as high as $121.70 some months earlier). By July 11, the share price had fallen to $49.18. Since that time, the stock price has rarely stayed above $50 per share for any real length of time. This prolonged period of stock price inactivity let Berkshire greatly increase its stake in the company.
As of June 30, Berkshire held just 6.5 million shares of USG. Today, Berkshire owns more than 17 million shares of USG.
Berkshire already held 6.5 million shares of USG as early as November of 2000. That initial stake cost Berkshire approximately $16.90 per share.
However, the majority of Berkshire’s position in USG was bought within the last three or four months. So, the cost of Berkshire’s stake is now considerably higher.
Weakness in the U.S. housing market is the generally accepted explanation for the sharp decline in USG’s stock price during the second and third quarters of 2006. USG has considerable exposure to the housing market. In fact, “Sheetrock” is actually a USG brand name.…
The site is very well designed and easy to use. Stories are tagged and organized by stock ticker. Users who submit stories can also choose the most appropriate category for their submission. As a result, it’s very easy to find the kind of stories you’re most interested in.
I really like the site and encourage everyone to give it a try.
I’m sure I will be mentioning some stories I found at Value Investing News in the days ahead.
Gannon On Investing’s newest contributing writer, Steven Rosales, reviews James Grant’s book, Bernard M. Baruch: The Adventures of a Wall Street Legend.
You can win a copy of Benjamin Graham’s “Security Analysis” (1934 edition)
All you have to do is pick your favorite post from this blog.
Favorite Post Contest
The Favorite Post Contest ends at midnight tonight.
Here’s how the contest works. You can either send me an email or comment to this post by clicking the “comments” link below. You select your favorite post from this blog. If that post ends up getting the most votes over the course of the contest, you’ll get a free copy of Benjamin Graham’s Security Analysis. The book is a modern reprint of the original 1934 edition. It’s currently available on Amazon.
Browse the “Posts By Ticker” and “Archives” links presented on the right sidebar to start your search for the best posts from the last year.
You can’t “nominate” a post someone else already chose. So, you need to pick a new favorite post.
Feel free to comment on the posts picked by others. I will give away another copy of Graham’s Security Analysis for the best comment.
So, for the best chance to win, pick a post and comment on the posts picked by others.…
The Favorite Post Contest ends Monday, October 9th.
Here’s how the contest works. You can either send me an email or comment to this post by clicking the “comments” link below. You select your favorite post from this blog. If that post ends up getting the most votes over the course of the contest, you’ll get a free copy of Benjamin Graham’s Security Analysis. The book is a modern reprint of the original 1934 edition. It’s currently available on Amazon.
Browse the “Posts By Ticker” and “Archives” links presented on the right sidebar to start your search for the best posts from the last year.
You can’t “nominate” a post someone else already chose. So, you need to pick a new favorite post.
Feel free to comment on the posts picked by others. I will give away another copy of Graham’s Security Analysis for the best comment.
So, for the best chance to win, pick a post and comment on the posts picked by others.…
Generally, I don’t like investing in retailers, because it is nearly impossible to find one with a durable competitive advantage. I do, however, like to invest in companies generating tons of truly free cash flow and consistently earning good returns on invested capital while maintaining a pristine balance sheet. When one such company is priced at less than a dozen times earnings (and a part of that price is attributable to the cash in its coffers) my heart begins to patter.
The object of my affection: preppy teen retailer American Eagle.
I’m revisiting this post, because things have changed. Well, one thing has changed – the price of American Eagle’s shares. At the time I wrote the blog’s inaugural post, shares of American Eagle traded at $22.02. Today, they stand at $43.78.
That’s almost a double. But, not quite – it’s actually an increase of 98.82%.
Needless to say, my view of the stock has changed. The company’s shares no longer represent an especially attractive opportunity.
A recent post at Focus On Value mirrors my own thinking (both then and now). I have no special insight into American Eagle as a business. I simply thought it was a cheap stock – yet another victim of the often irrational pricing of teen retailers’ shares in the stock market.
As you can see in the above chart, American Eagle’s three publicly traded “peers”, Abercrombie & Fitch (ANF), Aeropostale (ARO), and Pacific Sunwear (PSUN), have greatly underperformed American Eagle during 2006. Therefore, the 98.82% gain is clearly not the result of a multiple expansion or change of sentiment within the U.S. equity market as a whole or the teen retailer group in particular, but rather a reassessment of American Eagle’s relative value. The company’s share price has greatly increased both in absolute terms and relative to its peers in particular and stocks in general.
While I don’t normally discuss shorting stocks on this blog; I can’t ignore the obvious opportunity presented by the existence of such mispricings. Clearly, exploiting such “relative bargains” is a field of activity that might be appropriate for some value investors – especially as a complement to other (more concentrated) investment operations.
In situations such as the one that existed on December 24, 2005, it is possible to purchase an issue that is especially attractive on a relative basis (but would be inappropriate as a large, long-term position in a concentrated portfolio) by shorting a relatively expensive peer of comparable (or lesser) quality.
For instance, in this case, you could have shorted Abercrombie & Fitch (which ironically had been something …
You can win a copy of Benjamin Graham’s “Security Analysis” (1934 edition)
All you have to do is pick your favorite post from this blog.
Some of you may remember when I gave away two copies of Benjamin Graham’s Security Analysis through the “Widest Moat” contest.
Today, I’m announcing a new contest of sorts. Really, it’s another opportunity to win a copy of Graham’s Security Analysis. Hopefully, it will also be an opportunity for new readers of this blog to find some good posts they might have missed.
Here’s how the “Favorite Post” contest works. You can either send me an email or comment to this post by clicking the “comments” link below. You select your favorite post from this blog. If that post ends up getting the most votes over the course of the contest, you’ll get a free copy of Benjamin Graham’s Security Analysis. The book is a modern reprint of the original 1934 edition. It’s currently available on Amazon.
Of course, you can’t “nominate” a post someone else already chose. So, you need to pick a new favorite post.
From now until 11:59 p.m. on Monday, October 9th, I will accept nominations. After that, the voting will begin. The voting will consist of picking a post and explaining what you liked about it. Just like in the “Widest Moat” contest, I will select the best comment by a voter and give away a second free copy of Ben Graham’s Security Analysis.
I’ll explain the voting part in greater detail later. For now, simply pick your favorite post from this blog. Browse the “Posts By Ticker” and “Archives” presented on the right sidebar (scroll down to see) to find the best posts from the last year.
Also, feel free to comment on the posts picked by others. I will give away another copy of Graham’s Security Analysis for the best comment. In all, there will be three free copies of Security Analysis given out over the course of this contest.
So, for the best chance to win, pick a post and comment on the posts picked by others.…
