Every 3-4 months, I do a comprehensive review of my portfolio, comparing all of my current companies to a set of potential buy candidates.? The buy candidates come from all sorts of sources, and I do my best to forget who gave them to me, so that I can approach them fresh.? Here are the candidates:
ACH ADP AHN AIB AIG AKR AMGN APA ARP ATI BBD BBV BJS BK BLL BMA BMO BP BTU BWA CAH CCK CCRT CENX CHT CMI CNQ CNX CODI COF COG CPA CPL CR CRI CRK CS CTL CVH CVX CW CXW DDS DEI DFS DRC DSX DVN ECA EIX EMC EOG EPD EQ EXP FCX FLR FLS FRX FWLT GFI GLYT GNI GOL GOLD GR GSB GSF HCC HD HDL HGRD HLX HSR IBCP IM IMOS INFY IR IRE ITU IVN JCI JCP JEC JNJ JOYG JRT JWA KBW KEG KFT KMP LM LMT LNT LOW LSI MBT MBWM MDR MEOH MER MI MMC MOS MPG MRO MU MVO NBR NC NCI NEM NOV NTRS OXY PBR PBT PCH PCL PCZ PG PMD PNC POPEZ POT PPC PTI PXP QTM R RAIL RDY REXI RHI RIO RRD RS RTP RWT RYN SAN SBR SDA SE SGR SGY SII SKX STD STT STX STZ SVVS SYNT T TBSI TD TEN TEVA TEX TLM TRS TSO TTM TWIN UBS UFS UG UHT USB USG USTR VCP VIP VIV VSL VZ WDC WFC WHG WLL XTO XTXI
Alphabet soup, I’ll tell ya.? Here’s where we go from here:
- Update my industry models.
- Run a screen off of the results of the industry models to pick up a few more ideas.
- Scrub the quantitative data for errors.
- Run my ranking system.
- Fundamentally analyze the top buy candidates to find a few good buys.
- Look at the bottom of my current companies in the rankings to decide what I sell to fund the buys.
And, if you have a company you’d like to toss into the mix, let me know.? I’ll toss it in.? This process should complete sometime in the week that begins on 21st, because I need to finish up preparations for a speech that I am giving on the 15th.
Many tickers mentioned, but I own none of them.
I think you should take a good look at FMD too.
These are the passers from my last screen for value.
Repeat qualifiers: Charlotte Russe CHIC
CNA Surety Group SUR
Gannett GCI
Gehl Company GEHL
Investors Title Co. ITIC
Nautilus Group NLS
One Liberty Properties OLP
PMI Group PMI
Triad Guaranty TGIC
There are two new qualifiers:
Adams Resources & Energy AE
Getty Images GYI
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I notice that you don’t have the money center banks (bac, c, jpm) at the time when the yield curve may be steepening.
If I could nominate one, it’d be C, which I’m long.
(I’ll read through your previous stuff, but I’m curious whether you perform a sum-of-parts analysis on conglomerates such as Citi, which I think should be broken up.)
What’s your ranking system? Have you written a note about it? Also, what was the criteria for inclusion in the list above?
I’ll probably suggest some other stocks as a function of the above. Also, as a value investor myself, I think the following pair of questions is worthy of reflection and debate: 1) Is undervaluation better thought of as a ranking factor or a safety factor – e.g. should one try to pick the most undervalued stocks so they go up the most, or should I try to pick stocks with most improving outlook and use undervaluation and/or low growth estimates as a safety net in case they blow up? 2) To what extent should I use the valuation measure that makes the most rational sense to me vs. the one that gives the best empirical match to market behavior ( fine to reference mean reversion in the answer, but I expect that one can fit data over a long time frame and still find important differences between the two).
FWIW, I own RYN and RWT. RYN is probably fully-valued, but RWT is VERY interesting at these prices.
You seem to have precious metals/infrastructure/ag. commodities heavily weighted. In those area I own PAAS, KBR, and BG… the latter two have already had pretty good runs so I don’t know if they would interest you (though their valuations aren’t out of line w/ some of the comparable names you have there). I have been keeping an eye on SWC and CMP, too.
POPEZ is an interesting one that I own and have thought about adding to in the low 40s. If you have VCP up there, ARA might interest you, too.
Lastly, I have recently bought into PTRY (2nd time I’ve owned it) and have had an eye on DF. If we really are going to inflate our way out of debt, might as well look at companies that are highly leveraged and cheap on sales.
ANAT and NWLIA (no position)
I’m long a few of your prospects, so I’ll be interested to see if you select them.
I’m looking forward to your infrastructure ideas; i sold FWLT 50 painful points ago; ouch!!!~
I’m surprised KO isn’t on the list as a possible weak dollar play. Lots of good names on that list though. I’m a big fan of JNJ and TEX right now.
I am interested in your feelings on GLYT. I have recently bought this company. The reported in-line earnings back in July but guided lower, and the market took out their frustrations on them.
They have shown growth both in revenues and earnings and have been pairing down their debt.
Let me know your thoughts
Dave