Sometime during the last week, the YTD return of the Value Stock Guide portfolio crossed 35%. It now stands at 36.43%. S&P 500 meanwhile has returned 16.55%, excluding dividends. Interestingly, 27% of the portfolio is still in cash and has been this way for last month or two. It will be put to use at… [Read More]
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There are actually two sales to report. Tuesday Morning (TUES) was purchased on Mar 9, 2012 at an average cost of $3.64/share. Last week, on Sep 9, 2012, the entire position was liquidated at $6.26/share for a gain of 71.18% Another partial sale was made on Aug 21, 2012 on a stock that I still… [Read More]
Small cap stocks generally have a liquidity problem.
This is one of the reasons why most investors stay away from small cap stocks. This is also one of the reasons why good undervalued stocks are easier to find in this asset class.
The market for highly liquid stocks is also normally highly efficient. The price you pay for the convenience of having your transaction execute in seconds (instead of hours or sometimes days) is returns that are at best average.
In my 18 years of investing in small cap value, I have found that lack of liquidity is hardly ever an issue. Part of it is just practicing good investing habits. The other part is understanding precisely what we are doing when investing in small cap value.
Here is a riddle. Despite countless studies proving the superiority of value investing over growth or indexes, investors do not normally invest for value. Why is that? Don’t they want better performance and greater wealth?
If you are a shareholder, you generally welcome any share repurchase announcement. The math is simple, you think.
If the company remains valued at the same level in the market, the less number of shares this value is divided by, the more the value of the remaining shares. It is a way of engineering a higher share price.
What most investors forget to take into account is that the company is using its own cash up to buy these shares back.
These shares do not magically disappear.
Solar Stocks are in Cyclical Down Cycle The solar supply chain has been decimated and solar stocks are struggling due to over supply of Polysilicon and excess capacity. So what does this mean for the solar stocks and when is a good time to invest in them? Like semiconductors and most other industries that require… [Read More]
Be fearful when others are greedy and be greedy when others are fearful – W.E.Buffett Or, contrarian investing pays. Bill Gross of Pimco, the bond man himself, writes in his monthly market analysis that the "cult of equity" is over, and the consistent long term returns for stocks since 1912 will be viewed as a… [Read More]
Last week I sold off Homeowners Choice (HCII), a Florida based Property insurer. The stock was initially recommended to the Premium members in March of this year, and I purchased the stock for the Value Stock Guide portfolio on Mar 02, 2012 at an average cost of $11.18/share including commissions. The stock was sold at… [Read More]
What a way to finish the first half of 2012! The relief in the markets is palpable with the possibility that a solution to European debt crisis may be on hand. The story, of course, does not end soon, but the market will take any improvement in the situation. The Value Stock Guide Portfolio ended… [Read More]
Affordable Care Act is Here to Stay With the Supreme Court ruling the individual mandate in the Affordable Care Act as constitutional, it is time to start looking at how this law can affect your investments. Some of the effects are direct while some others are indirect. 1. Some companies and their stocks benefit A… [Read More]
The saga of Network Engines (NEI) comes to an end with the agreement today with Unicom Systems to acquire the company for $63.2 m in an all cash deal and take it private. The price offered at $1.45/share is 85.8% above the closing price of NEI yesterday at $0.78/share. I recommended and purchased Network Engines… [Read More]
Nokia (NOK) started today with the news that it is cutting 10,000 jobs by the end of 2013 and increased its loss guidance for the second quarter. The stock is down to $2.34/share or about 16% on the news. Sadly, this has become a familiar story for Nokia over the last year or so, as… [Read More]
Stock Recommendations – Popular is Not Often Profitable You would think that the financial media, even the reputable ones, have your best interest in mind when they publish their stock recommendations. You would be excused for believing that they actually do some research before they publish their analysis. If you do, you are giving them… [Read More]
The automotive industry in the US has seen its ups and downs, and while it is resurging now, few years ago it was on life support. Many of the factors that were pulling the sector down, such as weak consumer demand, also affected the replacement tires market. Consumer’s were more likely to wait longer to replace their old tires, where possible. Cooper Tires is one of these tire companies that have seen worse days and is now rebounding with general improvement in the economy, and the economics of their business.
Arcos Dorados Holdings Inc. (ARCO), incorporated on December 9, 2010, is a McDonald’s franchisee. As of December 31, 2010, the Company operated or franchised 1,755 McDonald’s-branded restaurants, which represented 6.7% of McDonald’s total franchised restaurants globally.
Do you find the post useful? Please share Share0 Tweet0 Corporate DNA The Corporate DNA is not a mythical term. It is much more than Corporate Identity. It is not the same as branding. It is a sense of history that reflects in the way a company conducts its business. It is entirely internal. To… [Read More]
Soon after purchasing the newspapers owned by Media General, Warren Buffett has now indicated that he may buy more newspaper assets in the coming years. According the the memo posted on the Omaha World-Heralds Buffett remarks "We will favor towns and cities with a strong sense of community, comparable to the 26 in which we… [Read More]
Buffett already owns the Omaha World-Herald and Buffalo News of New York along with a stake in Washington Post, and now he is buying up most of the newspapers owned by Media General. Berkshire Hathaway (BRKA) is paying $142 million for 63 local newspapers and will also loan $400 m to the company and provide… [Read More]
Tii Network Technologies (TIII) is a small communications company that accepted an offer of $33 m from Kelta Inc on Monday. This offer values company’s shares at $2.15/share which is a 48% premium to the stock’s closing price on Friday. Based on the assets, I feel that this acquisition is a good price for Kelta… [Read More]
Credit crisis, mortgage meltdown, irresponsible risk taking and leverage, record bonuses and bailouts. Fast forward to today, and we have JPM with their “we were stupid” moment. We all know what the problem is. Or do we? The large bonuses give the traders every incentive to load up on leverage and risk. Most of the… [Read More]