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

To: Brendan W who wrote (29489)	12/31/2007 10:08:32 AM
From: Brendan W	Read Replies (4) \| Respond to of 78523

Bought New York Times around $18 (now $17). You get a 5% dividend (supported weakly by a forward PE of 15) while you wait with infinite patience for the controlling owners to express economic rationality with asset sales. Stock is trading at a 10 year low (not surprising for a newspaper stock). The case for the company selling below break-up value is put forth: online.wsj.com Bought Brinker International around $20.50. Currently, the forward PE is under 10. The stock is selling near a 5 year low, yet over that period share count has been brought in 29%. This $900m buyback has mostly been funded with long-term debt which has increased $600m over the period to $953m. I figure 2003 EV was about $3.3B versus $3.0B now. Operating income looks to be weak for FY ending 6/2008 which is concerning. I’m betting the company’s earnings capacity is substantially higher than it was in 2003 as revenues in 2003 were $3.1B versus $3.8B forecasted for FY 6/2008. Bought Pool Corp @ $24 (currently $20). The company is the leading distributor of swimming pool supplies. The stock is at a 4 year low with a forward PE of 12. Share count has been bought down 10% over that period. Assuming there is no long term damage to the industry from global warming and water issues, it seems like a good bet to me. Bought FTD, the leading florist, at $13… having sold it last year at $18. Forward PE is about 10… this was an LBO so there is risk from the debt. Bought United Natural at $27 (currently $31). This is the leading distributor of natural foods (with large market share). Natural foods has demonstrated long-term growth trends as an industry. UNFI has doubled revenue and income over the last five years and I think it’s organic growth (about 15% per year). The runrate PE is around 20 which I think fair for its growth and my perception that they are maintaining a disproportionate share of the growing natural foods market. Bought Masco @ $23 (now $22). This is near a five year low for the stock price, yet shares outstanding have been reduced 26% over that period with long-term debt flattish. The dividend yield is over 4% and the forward PE is about 12. This company has some real names in cabinetry (Kraftmaid, Merillat and Mills Pride), plumbing (Delta, Hans Grohe and Peerless), and paints (Behr). Bought AIG at $61 (now $58). Current valuation is 1.4 P/B and a forward PE of about 10. I take a leap of faith in their accounting and that book value won’t be impaired materially by the sub-prime writedowns. Bought Costplus @ $3 in November and subsequently sold at $5.67 in December… an 87% rise on no news. There has been a breathtaking deterioration in operating income in recent years, but at $3 the company price to sales is under .07. It’s in the mid 4’s now. Bought Asta Funding @ $34 (now $27). The company buys/sells/manages non-performing consumer debt. Over the last four years revenue and earnings have grown annually in the 40+% range. Total Assets unfortunately have been growing at 50+%. With a forward PE under 10… I’m in for a ride. Bought Bed Bath & Beyond around $29. This is a 5 year low. Over that period the company has reduced share count 10%. It has no long-term debt. Forward PE is around 12. Return on assets is around 15%. Bought American Eagle Outfitters (again) at $23 … now $20.50. Return on assets is a blistering 24%. Forward PE is around 10. The company has no long-term debt and some excess cash. Bought Sealy at $11.50. I think this was an LBO. It has no equity and significant debt. Forward PE around 12. Corrections or warnings are appreciated... finance.yahoo.com