Geoff Gannon November 13, 2006

Festival of Stocks #10

Welcome to the tenth Festival of Stocks. The Festival of Stocks is a weekly blog carnival dedicated to highlighting the best recent posts on stock market related topics.

I am proud to present this week’s best entries to the Festival of Stocks. The articles are listed by category. The stock tickers are linked to Yahoo Finance. I have included my post “On Overstock’s Terrible Third Quarter” in this week’s festival; it is a follow-up to a series of earlier posts on that stock.

Overall, I was very pleased with this week’s submissions. What today’s festival lacks in quantity it more than makes up for in quality. The festival includes six posts discussing specific stocks, three posts on topics in investing, and a poem. Yes, you read that right. This week’s festival concludes with a poem. It’s the proverbial cherry on top of this satisfying stock sundae.


Stock Analysis

Hotung Baby! By Margin of Safety
Margin of Safety revisits Hotung Investment Holdings, a Taiwanese venture capital firm. The author notes that Marty Whitman’s Third Avenue Management recently added to its stake in the company, despite a nearly 50% increase in the share price over the last year.

Legg Mason: Unloved for Now? By Banker Notes
Banker Notes provides a brief overview of the investment case for Legg Mason (LM). At a price-to-book ratio of just under 2, the stock looks “relatively cheap”.

uWink: A Promising Project from Gaming’s Most Legendary Entrepreneur By Value Blogger
Kevin Kelly and Zac Bissonnette take a long look at uWink (UWNK), a small public company with an innovative restaurant concept and the leadership of Nolan Bushnell, “the 68-year old entrepreneur-extraordinaire” who founded Atari and Chuck E. Cheese.

Mueller Water Products, Walter Industries Remain Strong Buys By Controlled Greed
John Bethel revisits two of his holdings, Mueller Water Products (MWA) and Walter Industries (WLT). Both stocks sold off sharply last week, so now would be a good time to take a serious look at them.

Western Union Purchased By Fat Pitch Financials
George of Fat Pitch Financials explains the logic behind his purchase of Western Union (WU). The global leader in money transfers was spun-off from First Data (FDC) earlier this year. George thinks this spin-off of a wide moat company is a fat pitch – and he’s swinging.

On Overstock’s Terrible Third Quarter By Gannon On Investing
After Monday’s announcement of a year-over-year revenue decline for the third quarter of 2006, I’ve changed my tune on (OSTK). Earlier this year, I argued Overstock was worth at least $1.5 billion. After the company reported a year-over-year decline in revenues for the third quarter of 2006, I realized I didn’t understand the business.


Observations on Risk-Don’t Confuse Liquidity with Brains By Value Discipline
Rick of Value Discipline takes on the topic of risk aversion: “Risk aversion unfortunately tends to get thrown out the window by higher rather than lower prices, by exotic instruments rather than traditional ones, and by mystery and intrigue!”

The Profit Margin Paradigm? By Vitaliy’s Contrarian Edge
Vitaliy notes that corporate earnings have been growing faster than GDP. The problem with this situation is explained by the quote from Jeremy Grantham which begins Vitaliy’s post: “Profit margins are probably the most mean-reverting series in finance, and if profit margins do not mean-revert, then something has gone badly wrong with capitalism. If high profits do not attract competition, there is something wrong with the system and it is not functioning properly.”

My Recent Mistakes at Value Investing By Experiments in Finance
The author discusses two recent mistakes, Ergo Science (ERGO) and Hyperfeed Technologies (HYPR). He attributes both mistakes to his failure to stick to Benjamin Graham’s “margin of safety” principle.


Whole Revenge By Market Poetry
Market Poetry presents a poem with a point – a very sharp point aimed at the heart of Whole Foods (WFMI) . The author combines equal measures of common sense and humor. Undoubtedly the best investment related poem you’ll read today.

That’s all for this week’s Festival of Stocks. Next Monday’s Festival will be hosted by Fat Pitch Financials. You can start sending in your submissions now so George will have plenty of time to read your entries. Use this form to send your best recent stock market related articles for Festival of Stocks #11.

I’d like to encourage everyone to do what they can to spread the word about the Festival. Please post a link to the Festival on your blog, email it to friends, and bookmark it in the top social bookmarking sites.

Also, I’d like to apologize to those of you who submitted posts that didn’t make the cut. The issue wasn’t quality; it was subject matter. My aim was to put together a festival where each link was worth clicking. If your topic wasn’t aligned with the interests of our readers, your post didn’t make the cut. There are other financial carnivals out there that would be happy to include such posts. We try to keep this one “stockcentric”.