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Murray Stahl is the Chief Investment Officer, Chairman, Treasurer, and Chairman of Investment Committee at Horizon Asset Management. Overall, his holdings show that he is currently quite skeptical about the earnings power of many U.S. companies and is unenthusiastic about emerging markets, primarily as he believes that the level of risk outweighs the returns. What investors are not appreciating is that this guru is returning to his roots as a utility analyst, looking for businesses with stable cash flows and defensible competitive positions. These companies outside the classic utility industry include Dish Network (NASDAQ:DISH), conglomerate Howard Hughes Group (NYSE:HHC), and mining operator BHP Billiton (NYSE:BBL). In this article I will review five recent additions to Stahl’s investment portfolio in an attempt to uncover whether they are solid investment opportunities that will continue to grow in value.

DISH Network Corporation (DISH)

DISH has a market cap of $10.98 billion with a price to earnings ratio of 7.55. Its 52 week trading range has been between $17.95 and $32.56, and at the time of writing its trading price is around $24.50. It reported third quarter 2011 earnings of $3.60 billion-- a slight increase from second quarter earnings of $3.59 billion. Third quarter net income was $319 million, a decrease from the second quarter net income of $335 million. It has quarterly revenue growth of 13.13%.

One of DISH’s closest competitors is Time Warner Cable Inc (NYSE:TWC), which has a market cap of $19.15 billion and last traded at $60, with a price to earnings ratio of 13.86. It has quarterly revenue growth of 3.7%, a return on equity of 17.51% and pays a dividend with a yield of 3.1%. This data indicates that while Time Warner is a larger and more established company, DISH is outperforming Time Warner on earnings growth.

Stahl holds 2,429,834 shares of DISH, buying 985,498 shares in the third quarter 2011, adding to the 1,444,336 shares bought in the second quarter 2011. The average purchase price per share was $27.30. Based upon the last trading price of $23.49, he has made a return of -13.96%.

DISH’s cash position has worsened in the last quarter. Its balance sheet showed $1.05 billion in cash for the third quarter -- a decrease from $1.86 billion cash in the second quarter. DISH’s quarterly revenue growth of 13.13%, versus an industry average of 16.9%, and no return on equity, versus an industry average of 18.4%, indicates that it is underperforming many of its competitors.

The outlook for the CATV systems industry is positive, although Moody's have indicated it could be downgraded as cable TV companies face increased competition from phone and satellite TV companies. Moody’s recently stated; “Any recovery in the housing market and growth in rental equipment income should help the cable business, but this will likely level off by 2012." The positive outlook could also be attributed to consumers seeking cheaper entertainment opportunities due to the negative economic outlook and high unemployment. Accordingly, any uplift in the economy that sees an increasing in housing demand should bode well for cable TV companies such as DISH Network.

While DISH has reported a drop in cash holdings, it has managed to marginally increase its earnings and net income in a difficult operating environment. In addition, the industry outlook for cable TV companies is quite positive and this bodes well for DISH’s earnings growth prospects when there is an uplift in the economy. Accordingly, I agree with Stahl’s investment and rate the company as buy.

Franco-Nevada Corporation (NYSE:FNV)

Franco-Nevada has a market cap of $5.21 billion and is currently trading at around $41, with a price to earnings ratio of 39.16. Its 52 week trading range is $27.75 to $48.25. It reported third quarter 2011 earnings of $111.06 million, an increase from second quarter earnings of $102.96 million. Third quarter net income was reported at $43.23 million, an increase from second quarter net income of $32.26 million. It has quarterly revenue growth of 105.8%, a return on equity is 5.63% and pays a dividend with a yield of 1.1%.

One of Franco-Nevada’s closest competitors is AngloGold Ashanti Ltd (NYSE:AU). AngloGold has a market cap of $87.21 billion and last traded at around $45, with a price to earnings ratio of 90.68. It has quarterly revenue growth of 23.90%, a return on equity of 26.85% and pays a dividend with a yield of 0.5%. Based on these indicators it is outperforming Franco-Nevada.

Stahl holds 6,907,665 shares in Franco-Nevada, with the entire holding bought in third quarter 2011 at an average price per share of $40.77. Based on the last trading price of $40.76, he has made a return of -2.45%.

Franco-Nevada’s cash position has significantly improved in the last quarter. The balance sheet showed $387.20 million in cash for the third quarter, an increase from $273.30 million in the second quarter. Franco-Nevada’s quarterly revenue growth of 105.8%, versus an industry average of 55.2%, and a return on equity of 5.63%, versus an industry average of 10.3%, indicates that it is outperforming many of its competitors, despite not producing a better return on equity.

The earnings outlook for the gold industry is positive, and is believed to remain so for some time. The key driver of this outlook is the increasing gold price which is being driven by investors seeking a safe haven from the economic and market volatility impacting global stock markets. Recently, in September 2011 the gold price hit a record high. Although it has recently pulled back from that high, the bull-run in gold is likely to continue for the short to medium term, which will see increased revenue growth for gold mining companies.

In conjunction with the positive industry outlook, Franco-Nevada has increased its net quarterly income and a substantial increase in its cash holdings. Accordingly, the company is well positioned to capitalize on any future growth opportunities. On this basis, I agree with Stahl’s decision to invest Franco-Nevada and rate the company as a buy.

BHP Billiton plc (BBL)

BHP Billiton has a market cap of $156.06 billion and currently trades at around $54, with a price to earnings ratio of 6.36. Its 52 week trading range is $49.90 to $86.96. Third quarter 2011 earnings of $23.25 billion were reported, an increase from second quarter earnings of $21.83 billion. Third quarter net income was $8.12 billion, a substantial increase from the second quarter net income of $6.73 billion. It has quarterly revenue growth of 33.6%, a return on equity of 44.72% and pays a dividend with a yield of 3.5%.

One of BHP’s competitors is Rio Tinto Plc (NYSE:RIO) which has a market cap of $92.22 billion and last traded at around $48, with a price to earnings ratio of 5.87. It has quarterly revenue growth of 18.4%, a return on equity of 29.04% and pays a dividend with a yield of 2.1%. Based on this data BHP is outperforming Rio.

Stahl holds 35,513 shares in BHP, with the entire holding bought in third quarter 2011 at an average price per share of $67.56. Based on the last trading price of $54.33 he has made a return of -19.58%.

BHP's cash position has declined, with the first half balance sheet showing $10.08 billion in cash, a decrease from $16.16 billion in the second quarter. BHP’s quarterly revenue growth of 33.6%, versus an industry average of 21.7%, and a return on equity of 44.72%, versus an industry average of 24.6%, indicates that it is a well managed company that is outperforming many of its competitors.

The outlook for the industrial metal and minerals industry is cautiously positive, primarily due to the high demand from China as its economy grows rapidly. Many analysts have predicted that metal prices will end the year with double digit growth as demand is still outstripping supply. This high demand bodes well for metals and minerals miners such as BHP.

When the positive industry outlook is considered in conjunction with BHP’s substantial increase in third quarter net income, strong performance indicators and attractive dividend yield, I agree with Stahl’s decision to invest in the company. In addition, BHP is currently trading at close to the bottom of its 52 week trading range and this indicates a buying opportunity. Accordingly, I rate BHP as a buy.

The Howard Hughes Group (HHC)

Howard Hughes has a market cap of $1.75 billion and is currently trading at around $44. Its 52 week trading range is $35.51 to $76.83. It reported third quarter 2011 earnings of $51 million, a slight decrease from second quarter earnings of $53 million. The third quarter net income was $66 million a significant decrease from the second quarter net income of $115 million. It has quarterly revenue growth of 65.9% and a return on equity of 3.79%.

One Howard Hughes’ competitors is WRE Key Statistics (NYSE:WRE), which has a market cap of $1.83 billion and last traded at $27.77, with a price to earnings ratio of 21.51. It has quarterly revenue growth of -5.7%, a return on equity of 1.71% and pays a dividend with a yield of 5.9%. Based on these indicators The Howard Hughes Group is marginally outperforming WRE.

Stahl holds 935,192 shares in Howard Hughes, purchasing 935,192 shares in the third quarter 2011, adding to an existing holding of 4,159,602 shares purchased over first and second quarters 2011. The average purchase price per share is $62.51. Based on the last trading price of $44.50 he has made a return of -28.81%.

Howard Hughes’ cash position has marginally decreased in the last quarter. The balance sheet showed $293.63 million in cash for the third quarter, an increase from $275.96 million in the second quarter. The net tangible assets have increased to $2.29 billion in the third quarter 2011, from $2.13 billion in the second quarter. Howard Hughes’ quarterly revenue growth of 65.9%, versus an industry average of 20.60%, and a return on equity of 3.79%, versus an industry average of 9.1%, indicates that it is outperforming many of its competitors with regard to growth but is not generating as good a return on shareholders’ equity.

The earnings outlook for the REIT industry is positive, despite the challenging economic conditions and market uncertainty. Overall the industry is seen as an attractive investment because REITs generate income, and pay an attractive dividend yield. However, there is some concern, as REITs that invest in property in the retail sector as it has been hit hard by the poor economy and high unemployment, creating considerable negative consumer sentiment and subdued spending. As earnings for the retail industry are declining, the ability to pay rents or expand to larger premises is affected. This has seen an increase in the vacancy rates for commercial retail centers, which has a flow on impact on revenue for REITs invested in retail property.

AMC Networks Inc (NASDAQ:AMCX)

AMC Networks has a market cap of $2.64 billion, and is currently trading at around $35. Its 52 week trading range is $29.66 to $44.21. It reported third quarter 2011 earnings of $283.91 million, a slight decrease from second quarter earnings of $291.97 million. Third quarter net income was $39.69 million, an increase from the second quarter net income of $27.06 million.

One of AMC Networks’ main competitors is Comcast Corporation (NASDAQ:CMCSA), which has a market cap of $57.88 billion, a price to earnings ratio of 15.28 and is currently trading at around $21. It has quarterly revenue growth of 51.10%, a return on equity of 8.62% and pays a dividend with a yield of 2.1%.

Stahl holds 29,116 shares in AMCX, purchasing 29,116 shares in the third quarter 2011 at an average purchase price per share of $35.45. Based on the last trading price of $34.60, he has made a return of -2.4%.

AMC Networks’ cash position increased in the last quarter. The balance sheet showed $224.96 million in cash for the third quarter 2011-- an increase from $197.84 million in the second quarter.

The outlook for the CATV systems industry as discussed earlier in the article is quite positive, and when this is considered in conjunction with AMC Network’s increased quarterly net income and balance sheet cash, I agree with Stahl’s decision to invest in the company. Accordingly, I rate AMC Networks as a buy.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Source: Focus On 5 New Buys From Super Investor Murray Stahl