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

To: Brian Sullivan who wrote (1825)	7/12/2012 4:40:42 AM
From: bruwin	Respond to of 4719

Thanks for your interest and submission Brian.

To: Brian Sullivan who wrote (1825)	7/12/2012 8:51:39 AM
From: Sergio H	Read Replies (1) \| Respond to of 4719

Hi Brian. CSX was going to be one of my picks as well.

To: Brian Sullivan who wrote (1825)	7/17/2012 7:54:44 PM
From: E_K_S	Read Replies (1) \| Respond to of 4719

Hi Brian Those are a lot of stocks you recommended for the SI challenge. AMAT Applied Materials - pass BLK BlackRock - have no idea CSX CSX Corp - maybe but have not reviewed this in over a year COP ConocoPhillips - Yes CMI Cummings - maybe but still could be over valued but getting close to a possible buy F Ford - neutral but hold shares INTC Intel - maybe but I have been buying @ $19.00 (and selling above $28.00) SPLS Staples - Have not evaluated but interesting I need to review more could be a candidate STX Seagate Tech - Definitely not - need to buy these disk drive makers around BV TGT Target - possibly but there are other retailers w/ a better risk/reward profile like JCP. I am not sure what your value propositions are and why one or more of these should be considered exceptional value candidates. I have owned and are familiar w/ AMAT, CSX, COP, CMI. F, INTC and think I understand their value propositions well. Of those I probably could make reasonable value arguments to own COP (as this is one of my top 10 holdings), INTC (in my top 20), F (recently peeled of 20% of my shares I have owned over 7 years), CSX (closed out my position based on it meeting my fair value target) and CMI (always liked it but very cyclical and to me is overvalued based on where we are in the current cycle). Without doing a full value review on each, I have a hard time recommending any of your picks other than COP. Even INTC is one I thought $30.00/share was a fair value number but maybe not w/ their reduced sales forcast. Are you prepared to write a paragraph on each selection and provide your argument as to what the value proposition is/are. For example on retailers, TGT may be a good choice but I can make a "value" argument that JCP has a better risk/reward profile. I would be interested in debating that (I have already discussed it a bit w/ Sergio). I am getting close to starting a position in JCP and have owned S, HD,TGT, WMT and TSCDY in the past. I loaded up on HD every time it traded in the high teens based on their stand alone real estate value (stock now traded over $50.00). One of my biggest value bets was with Sears at $19.00/share in the early 200-2001 period (eventually sold in the $50.00) and I see a similar thing occurring w/ JCP. Without knowing your value thesis, it's hard to evaluate the risk/reward of the investment similar to what Buffet does in his review. I see that a company like STX has more than four votes w/o any discussion as to it's value proposition. One of the benefits of doing the SI Buffet challenge is to brain storm w/ all the excellent SI members for ways to look at value possibilities. STX could be a "value trap" simply because the cost per MB of storage is decreasing exponentially and current BV of $8.64 (3x BV) and TBV of $6.28 (4x TBV) on any measure is not that good especially when a lot of those assets become worthless due to technology obsolescence. Therefore, you have to measure STX's value based on other factors like (1) FCF, (2) how fast they can manufacture new designs (ie efficiency of their manufacturing), (3) Net income to LT Debt at 1.5x not bad but how does that look in a high interest rate environment, (4) ROA & ROA preferably over 5 years @ 15.5% & 63.9% are excellent; Not so good when ROE viewed over 5 years especially in 2009 ROA and net margins really bounce around w/ this business even w/ good management. I guess the telling chart is what happens w/ BV over 5 years even w/ those huge capital investments. It's pretty much lower every year even with the huge capital investments. Is this really growing the business Buffet style? For me STX is a pass. I might consider it when selling at or around BV and hope the next selling cycle is profitable and works. This is a hard company to grow organically and buy and hold long term (ie hold at least over three years). STX may be the leaders in their industry but, for me the risk reward is not good unless I can buy it cheap. The company has been public, taken private and then went public again which shows that with each generation of products it's boom/bust. Not a typical Buffet company IMO. EKS