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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: Brendan W who wrote (26671)	4/26/2007 4:38:22 PM
From: Brendan W	Read Replies (1) \| Respond to of 78507

In the last month ... I added to a small Bank of New York position (bought 9/2004 at $30) at around $41. This is a GARP investment where I'm paying 16x next years earnings. It's going through a merger-of-equals with Mellon, a process that frequently leads to disappointments. In the long run, I like the merger so I'm looking to increase my position on pullbacks. I started a position in Digital River at $57. The 2008 PE is 21, so it's quite expensive. There is $300 million of net cash on the balance sheet to soften the nosebleed. The company provides electronic sales & distribution services to software companies. I don't know the company well but I am ASSUMING (a) its position vis-a-vis competitors is very strong and (b) that the switching costs for customers are very high and thus (c) it can grow earnings in the mid teen percentages for a long time. I have not looked at its earnings report from today. I started a position in Asta Funding at $40. The company collects consumer debt that it buys, e.g., from credit card companies. ROA and ROE per yahoo are 17 and 27% respectively. I've been watching since the high $20s and decided to nibble. I do not know whether the company would decline or prosper if the consumer debt bubble bursts. The 2008 PE is around 11, and it has grown earnings at 25% annually over the last five years. I started a position in Amazon at $42. At this level it was trading at 1.6x sales which I thought to low for a company growing sales as fast as Amazon. Then in its earnings release the company reported an upturn in margins and I just sold now at $62.74. I started a position at $14 in Ituran Location and Control, an Israeli company. It's earning around $1 but it's got a lot of cash on the balance sheet. ROA is high teens and ROE is high twenties. I started a position in ACA Holdings (credit to Crossy). Third Avenue has 12% of the outstanding stock. This IPO'd late last year. It's a specialty finance company that if you accept management's calculation of economic book value is trading at .67 times book. It's growing at a double digit percentage. It's a $15 stock which-- if you accept management's estimate of economic earnings-- has a single-digit PE. A similar company I bought earlier at $10.65 (now $12) is Primus Guaranty. Again if you accept this management's presentation of the economics, it's trading at 9x earnings, 1.4x book, and is also growing at double digit percentages. The company has a "AAA" rated sub. Stocks discussed: finance.yahoo.com