Awhile ago the NY times ran a story on a very successful mutual fund, Tweedy
Browne.....funny how their stock picking philosophy is completely opposite of everything
AMZN represents.....the fund has returned over 20% a year since 1959........
Here is piece of that article:
>>>"Your neighbors, your brother-in-law and your cab driver may be willing to
pay a fortune now for profits that high-technology companies such as Netscape
Communications Corp. and Pixar Animation Studios might earn in the next century.
But buying today on the hope that you'll find a greater fool to bail you out
tomorrow is not a sound investment strategy -- as many people who bought homes
in the 1980s have learned to their chagrin.
What is a sound strategy? According to one highly successful Wall Street firm, it's
buying stocks with these five characteristics: 1) low price in relation to asset value,
2) low price in relation to earnings, 3) a pattern of purchases by officers and
directors, 4) a significant decline in price and 5) small market capitalization.
The firm that lives by these five principles has a poetic, anachronistic name:
Tweedy Browne Co. It was founded in 1920 by Forrest Berwind "Bill" Tweedy,
who's described in the official
company biography as "a somewhat Dickensian character, suspenders, bushy
mustache and ample pot belly." Tweedy was later joined by Howard S. Browne,
whose sons Christopher and Willilam (along with John D. Spears ) are now
general partners.
Tweedy Browne's biggest client in the 1940s and 1950s was Benjamin Graham,
probably the greatest investor of all time and mentor to the current champion,
Warren Buffett. Graham, like Tweedy Browne partners through the past eight
decades, was a classic bargain hunter, or "value" investor. "<<<<<<
Lets look at AMZN:
1)HIGH price, NO asset value
2)NO earnings
3)a pattern of INSIDER sales
4)a significant RISE in price
5)a HUGE market capitalization (over 2 billion)
It would seem that AMZN is diametrically opposite to all 5 criteria of one of the best
value funds there is to be had today...........;^) |
