Comments on: Recent Portfolio Moves, and Insurance Company Musings http://alephblog.com/2008/06/07/recent-portfolio-moves-and-insurance-company-musings/ Helping Institutions and Ordinary People Invest Better by Focusing on Risk Control Fri, 25 May 2012 21:31:47 +0000 hourly 1 http://wordpress.org/?v=3.3.1 By: Marty S.http://alephblog.com/2008/06/07/recent-portfolio-moves-and-insurance-company-musings/comment-page-1/#comment-17747 Marty S. Mon, 09 Jun 2008 20:09:04 +0000 http://alephblog.com/?p=734#comment-17747 On a personal note, I like Allied Irish Bank (AIB). They've been pretty well hammered along with the rest of the banks, however their balance sheet isn't cluttered with "mess". They're looking to expand more into Poland as it appears that market may be consolidating a bit. For the energy sector, I concur on RIG, also like APA, DO and UPL. Would not be a buyer at current levels. On a personal note, I like Allied Irish Bank (AIB). They’ve been pretty well hammered along with the rest of the banks, however their balance sheet isn’t cluttered with “mess”. They’re looking to expand more into Poland as it appears that market may be consolidating a bit.

For the energy sector, I concur on RIG, also like APA, DO and UPL. Would not be a buyer at current levels.

]]> By: James Daileyhttp://alephblog.com/2008/06/07/recent-portfolio-moves-and-insurance-company-musings/comment-page-1/#comment-17742 James Dailey Sun, 08 Jun 2008 22:28:56 +0000 http://alephblog.com/?p=734#comment-17742 Personally, I am far more tactical than David. I believe that the bear market has resumed and that, while there are a growing number of relatively cheap stocks I can identify, I believe they could get much cheaper. I have found quite a few micro caps that are trading at very low valuations. One I have owned since February 2003 is Miller Industries (MLR). The company has paid down most of their debt and have a big cash position relative to their balance sheet. Their customers are suffering massively with diesel costs where they are and credit availability has been constrained for operators. I sold 95% of my position back in the post-Katrina spike in the stock but retain a smallish position as a placeholder. I think the stock could fall another couple of bucks as I don't think their cycle has troughed yet. But I think normalized mid cycle EPS is around $2-$2.50, so the stock is already cheap - I am just waiting for it to get a bit cheaper. Otherwise I think there is pretty good value in healthcare assuming the worst case political scenario doesn't emerge. Profit margins for the sector are near long term norms, so the "E" in P/E is pretty reliable...as opposed to some sectors where the "E" is based on elevated or record margins (like energy and basic materials) which makes the seemingly low P/E ratio deceptive. For example, a company like Sanofi-Aventis (which I and my clients own) is trading at a single digit P/E ratio based on conservative forward earnings estimates and pays a decent dividend that is well covered. The pipeline is decent and results in US dollars are benefiting from the weak dollar. I think there is an excellent opportunity for people to execute hedged, market neutral or long/short strategies at present. We have a big healthcare position, ag commodities, some precious metals stocks and a mortgage REIT versus short positions in the Nasdaq 100 and Emerging Market Equities. While to date the major market damage has been done in the financial and consume sectors, we believe this next bear market phase will bring with it recognition that this is a potentially broad based and deep recession that is developing and that many of the other sectors (particularly consumer based tech that dominate the Nasdaq 100 like RIMM, AAPL and GOOG) are expensive enough that should this more negative outcome emerge their stocks could go down much more than the SPX, DJIA or certainly healthcare...at least in our opinion! Personally, I am far more tactical than David. I believe that the bear market has resumed and that, while there are a growing number of relatively cheap stocks I can identify, I believe they could get much cheaper. I have found quite a few micro caps that are trading at very low valuations. One I have owned since February 2003 is Miller Industries (MLR). The company has paid down most of their debt and have a big cash position relative to their balance sheet. Their customers are suffering massively with diesel costs where they are and credit availability has been constrained for operators. I sold 95% of my position back in the post-Katrina spike in the stock but retain a smallish position as a placeholder. I think the stock could fall another couple of bucks as I don’t think their cycle has troughed yet. But I think normalized mid cycle EPS is around $2-$2.50, so the stock is already cheap – I am just waiting for it to get a bit cheaper.

Otherwise I think there is pretty good value in healthcare assuming the worst case political scenario doesn’t emerge. Profit margins for the sector are near long term norms, so the “E” in P/E is pretty reliable…as opposed to some sectors where the “E” is based on elevated or record margins (like energy and basic materials) which makes the seemingly low P/E ratio deceptive. For example, a company like Sanofi-Aventis (which I and my clients own) is trading at a single digit P/E ratio based on conservative forward earnings estimates and pays a decent dividend that is well covered. The pipeline is decent and results in US dollars are benefiting from the weak dollar.

I think there is an excellent opportunity for people to execute hedged, market neutral or long/short strategies at present. We have a big healthcare position, ag commodities, some precious metals stocks and a mortgage REIT versus short positions in the Nasdaq 100 and Emerging Market Equities. While to date the major market damage has been done in the financial and consume sectors, we believe this next bear market phase will bring with it recognition that this is a potentially broad based and deep recession that is developing and that many of the other sectors (particularly consumer based tech that dominate the Nasdaq 100 like RIMM, AAPL and GOOG) are expensive enough that should this more negative outcome emerge their stocks could go down much more than the SPX, DJIA or certainly healthcare…at least in our opinion!

]]> By: Andyhttp://alephblog.com/2008/06/07/recent-portfolio-moves-and-insurance-company-musings/comment-page-1/#comment-17739 Andy Sun, 08 Jun 2008 05:47:50 +0000 http://alephblog.com/?p=734#comment-17739 Hi David, are you leaning in any direction for your portfolio rebalancing, industry-wise, with the tickers you have been collecting? I can't really figure out this market - I have mostly sold, just adding RIG (on the Brazil developments) and a microcap wind power stock that James Altucher mentioned recently. If related companies like drillers are excluded, I may be going underweight oil for the first time in years (which surprises me almost as much as you being overweight financials). Hi David, are you leaning in any direction for your portfolio rebalancing, industry-wise, with the tickers you have been collecting? I can’t really figure out this market – I have mostly sold, just adding RIG (on the Brazil developments) and a microcap wind power stock that James Altucher mentioned recently. If related companies like drillers are excluded, I may be going underweight oil for the first time in years (which surprises me almost as much as you being overweight financials).

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