Great find by Micawber: "Outstanding Investor Digest" fund interview with Fairholme Fund's Bruce Berkowitz:
Message 25552085
Review: Outstanding Investor (OID) has been discussed here before. It's a very expensive booklet published very erratically (This March issue might be the first this year or first in past 12 months) with interviews with the "best" value investors. Warren Buffett is or was a subscriber and person who has recommended it. I've not seen any links to anything OID has published in the past couple of years: this is the first.
Right off the bat, I can see FRX is a buy for me based on my models. P/e of 6-7, high roe (avg. over 20%) past ten years, profitable in each of past ten years, profit margins are pharmaceutical-- average almost 20%, stock close to an eight or nine year low. No dividend; Fairholme says company is buying back shares.
A 3/31 report from Zack's says: "Management's guidance for the full fiscal year remains below results in 2008, but has been revised upwards for the 3rd time. Forest now expects full-year adjusted EPS(edit: not sure what "adjusted" entails) in the range of $3.35 - $3.45." I don't know when that guidance was given. If it holds and comes to pass, then p/e for FRX would be $21.64/$3.35 = 6.4.
This $21-22 stock has $7.26 in cash behind it. And the company is debt free (per Fairhome article and per Yahoo).
There might be some significant issues -- Fairholme says some investors are concerned about the guy who's the controlling FRX shareholder. Fairholme doesn't seem too worried though, FRX being one of their top ten holdings.
I've taken an exploratory position in FRX today, and intend consider it further with a view to moving into a larger buy. Looks like a value price for a growth stock, and with a margin of safety --no debt, plenty of cash.
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This link has a lot of meat in it. I hold a few URI shares, and may consider adding after I review Fairholme's comments. I got scared out of Hertz: I may reconsider. PFE, which several people here own, was discussed very positively. I've not done well with my forays into PFE: I may yet try again.
The front page of OID lists some of the stocks discussed in the current issue. Of course I will go through each stock on the list to see if I can find anything I like. |
