Focus On Value Investing

Video: Lampert on Long vs. Short-Term Investing

2011-10-15T16:07:00.001-04:00

Sears May License Craftsman, Kenmore, Diehard

2011-10-12T23:04:00.000-04:00

A Bloomberg source says Sears Holdings may license its Craftsman, Kenmore, and Diehard brands. Essentially, Sears would charge a fee to outside companies to use the brand names on their products. Sears has not confirmed this licensing model but with the other recent developments involving selling Sears brands at outside retailers, I'm guessing this is in the works.

Buffett Sees No Recession

2011-10-11T00:52:00.001-04:00

Railroad shipments are peaking as the holiday season draws near which could be a sign of an expanding economy according to Bloomberg. This is good news for Warren Buffett's railroad investment in Burlington Northern.

“Our railroad carried 200,000 carloads last week,” Buffett said Oct. 4 at a Fortune magazine conference in Laguna Niguel, California. “That’s the highest total in three years. And that’s stuff moving around the country, supplying merchants and doing all kinds of things.”

Buffett added: “As of today, the recovery is still under way.”

It's hard to go against Buffett's optimistic view on the economy but many people are still sitting on the sidelines as far as stocks are concerned. Where there is fear, there is opportunity.

Joel Greenblatt on CNBC: Big Secret for Small Investor

2011-10-07T23:40:00.000-04:00

Joel Greenblatt discusses a valuated index that he developed. His concept was to create an index that that is weighted toward the cheapest valued stocks as oppose to being equally or market cap weighted like the S&P 500. His index puts emphasis on finding value as oppose to just blindly buying the market regardless of value. Greenblatt states that the results tested over a 20 year period resulted in 6 - 7% better returns per year with the same beta or risk. The majority of people aren't going to beat the market actively investing in individual stocks; therefore, Greenblatt's index seems like a great investment that many people could benefit from in the long term. The only bad part, it's boring.

Peter Schiff on Gold

2011-10-02T11:55:00.000-04:00

Peter Schiff believes there is still value in gold. Link: On the Recent Gold Pullback

Lampert on Kmart's Real Estate Value

2011-10-02T00:01:00.000-04:00

There has been a lot of talk about Sears Holdings turning into a REIT lately. Eddie Lampert said in an interview for New York Magazine in 2005 that the real estate was not even factored when coming to a decision on the acquisition of Kmart. It is interesting to see how the company's objective is beginning to shift from a retail turnaround strategy to an attempt to unlock value with existing brands. The only sure thing with Sears Holdings going forward will likely be the stock repurchase program.

Q; You say Kmart wasn’t a real-estate play.

Lampert: What I focused on when I invested in Kmart was the potential for a revitalized retail operation. We didn’t even do a separate valuation of the real estate.

Source

Mortgage Backed Securities Explained

2011-10-01T18:10:00.002-04:00

Here is an illustrated explanation of mortgage backed securities (MBS). This is obviously just a starting point but the video does a great job of easily explaining the concept behind these investments that we hear so much about. The Khan Academy has numerous videos on banking and money for those interested in learning more on various topics. Link.

Jim Rogers Mises Institute Interview

2011-09-30T23:43:00.000-04:00

Jim Rogers is a big believer in raw materials, agriculture, and the future of Asia. This is an interesting hour long interview with Rogers with a Q&A session.

Video: Buffett on the Economy and the 'Buffett Rule"

2011-09-30T22:16:00.001-04:00

Warren Buffett appeared on CNBC where he fielded mostly questions about the Obama tax agenda in this video. Buffett has received criticism regarding his new tax rule. Buffett clarifies his plan as follows: "My program would be on the very high incomes that are taxed very low - not just high incomes, not just some guy making $50 million playing baseball, his taxes won't change. Make $50 million appearing on TV, his income won't change. But if they make a lot of money and they pay a very low tax rate, like me, it would be changed by a minimum tax that would only bring them up to what the other people pay." Read more: http://www.businessinsider.com/warren-buffett-obama-cnbc-2011-9#ixzz1ZUZjV6Sq

Lampert's ESL Investments Sells Shares of AutoZone

2011-09-30T18:16:00.000-04:00

Eddie Lampert's ESL Investments has sold $95,911,877 in AutoZone (AZO) stock over the last 3 days. ESL Investments has been dumping shares over the last year with no notable insider buying during this period. Source

DieHard Now Available at Meijer

2011-09-29T19:04:00.000-04:00

Sears Holdings (SHLD) continues to create brand value by allowing Meijer stores to carry DieHard battries. This will be the first time you can buy DieHard outside of a Sears or Kmart store. I have shopped at Meijer many times and it is not the first place you'd think to buy auto batteries; however, the stores seem to be getting way more customer traffic than my local Sears/Kmart. For those not familiar with Meijer, it is very similar to a Walmart with a grocery section. I'm surprised AutoZone (AZO) wasn't tapped to be the first outside retailer to sell DieHard since Sear's Chairman, Eddie Lampert and his investment fund have a huge stake in the company.

From the Sears press release:

"We are bringing one of America's most trusted brands to more places and unleashing the value of DieHard," said Chris Caruso, GM of DieHard. "For more than 40 years, the DieHard brand has delivered superior performance that consumers demand with each turn of the key. Now we are strategically expanding the distribution of the DieHard brand to provide access to America's most preferred auto battery brand to more consumers when they need it. To achieve that goal, Sears Holdings has entered into a license agreement with East Penn Manufacturing to distribute DieHard Gold to Meijer."

"Meijer is pleased to enhance our automotive department with the addition of DieHard auto batteries," said Mark Carpenter, automotive buyer for the Grand Rapids, Michigan-based retailer. "Meijer customers expect the highest quality products at an exceptional value, plus the addition of the DieHard brand to our automotive offerings is yet another way we are living up to our promise of higher standards and lower prices."

Sears a REIT?

2011-09-27T21:15:00.000-04:00

Speculation that Sears Holdings (SHLD) is transforming into a REIT was said to be the potential cause for stock to close up over 6% today. I recommended reading the Stone Fox Capital article which brought up the REIT question, if you haven't already. Stone Fox Capital sees great upside in the stock for those with a long term horizon.

From the article:

"Remember SHLD only has a $5.6B market cap while Simon Property Group (SPG), a leading property leaser, is worth $33B. SPG has a lot less real estate than SHLD controls.

In my earlier article, I showed how brands similar to ones owned by SHLD were worth over $19B. That's a combined value of $52B if SHLD was able to build a successful REIT and grow the brands. This value might seem lofty for now, but SHLD has other untapped potential including brands not even analyzed, like Lands End."

Clearly Sears is starting to make some notable moves beyond the large share repurchase program to create shareholder value. It will be interesting to see the company's transformation process over the next several years.

Huge Insider Buying at American Eagle

2011-09-26T22:15:00.000-04:00

Insiders have been buying big at American Eagle (AEO). They have bought 1,134,490 shares worth $12,655,152 over the last month. Notably, Chairman Jay Schottenstein bought 1,000,000 shares worth $11,182,387. I haven't owned shares of AEO in quite a while but after huge insider buying like this, it may be a good time to do some further analysis on the company.

Insider Data

Buffett's Berkshire Hathaway to Repurchase Shares

2011-09-26T19:07:00.003-04:00

It was announced today that Berkshire Hathaway would buy back shares at 110 percent or below book value. The company will only repurchase stock if the cash equivalent holdings are above $20 billion. Berkshire Hathaway had approximately $47 billion in cash as of June. The company said in a press release today, " In the opinion of our Board and management, the underlying businesses of Berkshire are worth considerably more than this amount, though any such estimate is necessarily imprecise. If we are correct in our opinion, repurchases will enhance the per-share intrinsic value of Berkshire shares, benefiting shareholders who retain their interest." Buffett is giving you a gift here if you are a long term investor, in terms of risk/reward.

What has Buffett said about stock repurchases in the past?
'Now, repurchases are all the rage, but are all too often made for an unstated and, in our view, ignoble reason, to pump up or support the stock price. The shareholder who chooses to sell today, of course, is benefited by any buyer, whatever his origin or motives. But the continuing shareholder is penalised by repurchases above intrinsic value. Buying dollar bills for $1.10 is not good business for those who stick around.’ -1999

In addition:
“There is only one combination of facts that makes it advisable for a company to repurchase its shares: First, the company has available funds — cash plus sensible borrowing capacity — beyond the near-term needs of the business and, second, finds its stock selling in the market below its intrinsic value, conservatively-calculated. To this we add a caveat: Shareholders should have been supplied all the information they need for estimating that value. Otherwise, insiders could take advantage of their uninformed partners and buy out their interests at a fraction of true worth. We have, on rare occasions, seen that happen. Usually, of course, chicanery is employed to drive stock prices up, not down….

It appears to us that many companies now making repurchases are overpaying departing shareholders at the expense of those who stay. In defense of those companies, I would say that it is natural for CEOs to be optimistic about their own businesses. They also know a whole lot more about them than I do. However, I can’t help but feel that too often today’s repurchases are dictated by management’s desire to ‘show confidence’ or be in fashion rather than by a desire to enhance per-share value.” -2000

Sears to Lease Store Space

2011-09-23T20:41:00.003-04:00

Sears looks to sublet just about any area of a variety of Sears and Kmart stores, including the parking lot. Its good to see they are thinking outside the box to earn revenue. Article: Sears to sublet store space

Video: Jim Chanos on China

2011-09-20T23:20:00.001-04:00

A discussion on China with hedge fund manager Jim Chanos.

Bruce Berkowitz Interview with WealthTrack

2011-09-20T00:04:00.000-04:00

Bruce Berkowitz Interview with Consuelo Mack: Link

Joel Greenblatt CNBC Interview

2011-09-19T23:53:00.000-04:00

Joel Greenblatt discusses Magic Formula investing on CNBC's Squawk Box. The most difficult part of the Magic Formula is staying the course no matter what your portfolio return yields. This is easier said than done for most people. It is clearly a long term strategy for value investors who can put emotions aside, as Greenblatt discusses in the video.

Should Sears Sell Its Brands at Other Retailers?

2011-09-15T21:49:00.003-04:00

Retail expert Howard Davidowitz discusses why it is a long term bad idea for Sears to sell its brands at other retailers. You can already buy Craftsman tools outside of Sears stores. Now Sears is reportedly thinking of selling its Kenmore brand at Costco. What will be the point of going to a Sears store when the signature Sears brands are being outsourced for sale at other stores? Any thoughts? Link: Kenmore appliances may move beyond just Sears

Lampert Among 2009 Top Hedge Fund Earners

2010-04-04T21:28:00.007-04:00

Eddie Lampert tied with Carl Icahn for number 6 on the 2009 hedge fund earners' list, making $1.3 billion according to the Chicago Sun-Times.

The top 5 earners in 2009 were:

• David Tepper of Appaloosa Management, making $4 billion.

• George Soros of Soros Fund Management, $3.3 billion.

• James Simons of Renaissance Technologies, $2.5 billion.

• John Paulson of Paulson & Co., $2.3 billion.

• Steve Cohen of SAC Capital Advisors, $1.4 billion.

Links: Bacon, China, Miller, and More

2010-03-28T17:44:00.007-04:00

Miller Beats Miller as Legg Mason Opportunity Trounces Flagship

Bacon and Cheesecake like Coke and Heroin

Is China the next big bubble?

China: the coming costs of a superbubble

Chapter 11 for Borders?

RadioShack considering sale, Best Buy merger

The Russian Capitalist

Watch CBS News Videos Online

Joel Greenblatt on CNBC

2010-03-27T12:47:00.004-04:00

Joel Greenblatt made an appearance on 'Squak Box' where he discussed the excellent performance of his Magic Formula Investing strategy over the long haul. The hardest part of Magic Forumula is being able to stick to the principles of the system over a long period of time. This appears to be a great strategy based on the data if you're discipline enough not to waiver from the system.

Berkshire Hathaway Subsidiary To Buy Kahn Ventures

2010-03-22T21:54:00.003-04:00

McLane co., a unit a Berkshire Hathaway, will buy wholesale distributor Kahn Ventures. Kahn distributes wine, beer and distilled spirits in Georgia and North Carolina. Warren Buffett, Berkshire’s Chairman and Chief Executive Officer, said of the deal “We are excited about the opportunity to have Empire become part of our portfolio of outstanding businesses. We expect that the Empire acquisition will provide us with a solid platform for potentially acquiring other similar high quality wholesale distributors.”

Jim Rogers Discusses the "Stimulus" Package

2009-02-16T23:38:00.000-05:00

Being Hated A Good Thing?

2009-01-02T22:08:00.004-05:00

It is no secret that Sears Holdings is a hated stock by analyst. However, I didn't realize it was rated at the bottom according to a recent Bloomberg commentary article by John Dorfman.

Dorfman states in the article: "According to Bloomberg tabulations as of Dec. 29, the average rating on the Hoffman Estates, Illinois-based company was 1.29 on a scale where 1 equals “sell” and 5 is a strong “buy.” That gave Sears the worst score among the 2,678 U.S. stocks with a market value of at least $250 million."

As you probably guessed, analyst opinion doesn't typically amount to a fatter brokerage account. Dorfman studied loved and hated analyst stocks from 1998 through 2007 which resulted in the most hated outperforming the loved on average. It seems it's not always wise to follow the crowd.

Read the full article: Sears as Most-Hated Stock Might Be a Good Thing: John Dorfman