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

To: Spekulatius who wrote (53360)	2/9/2014 11:13:39 AM
From: E_K_S	Respond to of 78752

Alleghany Corporation (Y) -NYS After a quick review of their Web site, there just is not enough transparency into what the company owns, where they generate their revenues and their exposure to future liabilities in their re-insurance business and/or derivative hedges they may hold in their subsidiary companies (ie how much exposure do they have in foreign markets like EU and if they re-insure CDO's of these foreign banks) . I generally like their different core businesses and assets but it's just not as clear as if they were a mutual fund and I could look at their top 10 holdings. Also, I did not see any stated dividend but rather from time to time they did do stock splits. So, if holding this as a source of funds, you are subject to significant market price risk fluctuations which does not necessarily reflect it's true book value. So, at the current price, you are betting that the stock is selling at a significant discount to book and w/ any sustained market rally and/or future earnings growth, the stock price will go up accordingly. Markets over shoot on price so, to me, it's no different for 'Y' and their group of assets. Long term, this could be a good undervalued entry point but I would never rely on my shares to be a source of funds unless I had a very long time period so I was not forced into a sell decision. In general, I have avoided all insurance companies for this reason. They are just too complicated for me. ---------------------------------------------------- I am concerned w/ all the QE money floating around the world and if/when rates begin to rise, I too want to be in revenue generating assets that will not lose (too much) value as market rates adjust. I think companies that have a record of growing sustainable dividends will do better than companies that pay no dividend. I have taken this one step further by buying sustainable "growing" revenue streams usually found in REITs and MLP's (not "commodity" based but "fee" based). MLP Database showing Distribution Growth rates and Coverage I have been using the above web site to drill down the U.S. domestic fee based MLP's to obtain a group of undervalued companies that have either (1) sold off significantly because current distribution growth has stalled (ie UAN), (2) have great distribution coverage but the current stock price does not reflect that (ie FISH) and/or (3) may be undervalued on the company's future distribution "expected" growth rate. (Note: You must be careful on these "expected" growth factors as several of these MLP's have already priced in these higher growth rates which could fall if/when global interest rates (ie cost of money) rise substantially from current levels.) ----------------------------------------------------- I think we are trying to find the same type of "core" assets to own that will be least effected by the eventual rising rates. 'Y ' could be a good place to hide but I would rather want to hide in one or more dividend paying stocks that have a core group of assets I understand, can view on a regional map and can drill down and see what % is utilized to determine future revenue growth potential. For me, 'Y' is not transparent enough and I just do not know what landmines lie ahead especially in their derivative products then may or may not hold in their subsidiary companies. FWIW, I continue to hold my NESTLE's position I bought when you first mentioned it a few years ago. I understand their business and know what I own. EKS