Month: April 2013

How to Improve Results

Think Differently: Buying Cheap Stocks is Difficult

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“If you want to have a better performance than the crowd, you have to do things differently from the crowd.” –John Templeton The above quote is one of my all time favorites. It’s a ubiquitous concept: we hear it all the time…. buy what others are selling, buy fear, sell euphoria, etc… The quote represents obvious importance. But the interesting thing is that although it’s an oft used phrase, it is practiced much less often than you might realize. Taking a […]

Investment Philosophy

Steven Romick Interview

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Steven Romick is an outstanding investor with a long history of beating the market in the FPA Crescent Fund. Romick is an absolute value investor with a broad investment mandate. He invests in a variety of asset classes including stocks and bonds, but also alternative assets such as farmland and real estate. Romick is a smart guy, and you can learn a lot by reading his letters and watching his interviews. He’s different from most value investors because he willing […]

Investment Ideas & Company Research

Check Point Software (CHKP) is a Free Cash Flow Machine

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One of the things Buffett consistently refers to when evaluating the quality of a business is the amount of cash it produces relative to the amount of cash it needs to maintain the business. Buffett calls this cash flow that is produced “owner earnings”, which is basically free cash flow. Buffett defines owner earnings as the cash flow a business produces less the capital expenditures a business has for maintaining the business (he excludes growth capex). Free cash flow is […]

General Thoughts

Top and Bottom Industries

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I use Value Line on a daily basis. It’s a great resource for viewing the long term history of a stock’s balance sheet and income statement data. Many stocks have 15 years of financial data, which is easy to look at on one page. I flip through the pages daily to look for investment ideas. Each week, Value Line also prints a list of screens that are very useful to review. On page 24 of each weekly issue, they rank […]

Uncategorized

Apple Announces Largest Share Repurchase Program in History

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Earlier this week, I wrote an article on AAPL and MSFT and I mentioned how the two main ways that companies can return cash to shareholders are dividends and share repurchases. I like both, but for different reasons. Dividends allow me to reinvest capital anywhere, but I get taxed on those dividends (unless the shares are held in a tax deferred retirement account). Share buybacks are when the company reinvests capital for me back into the stock I hold. Share […]

Investment Philosophy

Markel’s Tom Gayner Has 4 Main Investment Principles

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I’ve been doing some research this week on insurance as there are a number of stocks in this industry on my watchlist. Yesterday I went through the Value Line list of life insurers, many of which are selling well below book value. I’ll be taking a look at a few of these in more detail soon. Of course, insurance is a business that Warren Buffett has used as a foundation at Berkshire to build his investment fortune. But there is […]

General Thoughts

Investing vs Speculating

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“Outright speculation is neither illegal, immoral, nor (for most people) fattening to the pocketbook.” –Ben Graham, Intelligent Investor I wrote this post on why I bought MSFT and AAPL last week and I reposted it over at Seeking Alpha where I received around 60 comments with various opinions, mostly having to do with AAPL. I’ve noticed that Apple is one of those stocks that really ignites emotion from people. This chart can cause a lot of frustration for short term oriented shareholders: […]

How to Improve Results

Five Minute Stock Checkup

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With around 10,000 stocks to choose from when making investment decisions, you need to have a way of narrowing down the universe to a manageable number to perform more detailed research on. I’ve discussed my investment process a bunch in past posts, and I’m always looking for ways to make my routine more efficient. I basically use Value Line, screeners, 13-F’s, and other blogs for ideas on specific investments. I then put all my potential stock ideas onto a couple […]

Motivational

Who is Walter Schloss?

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Everybody has heard of Buffett. Every value investor knows Graham. But Walter Schloss is a man that for most of his life, despite putting up one of the all time great track records, spent most of his life under the radar. I suspect he liked it that way. Many value investors have extensively studied Schloss and his methods, but there are still many who have not heard of him, or haven’t read much about him. Schloss passed away last year […]

Investment Quotes

Buffett on Farmland & Exxon Mobil vs. Gold

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Gold and silver prices are crashing this morning and I was reading some news on my Twitter feed I noticed someone link to a post at Ivanhoff.com called Warren Buffett on Gold. Ivanhoff had a nice summary from Buffett’s 2011 Berkshire Shareholder Letter that contains one of my favorite description of gold’s value and how to think about the investment case for the yellow metal. Here is Buffett on how you should think about gold: “Today the world’s gold stock […]