3 Picks From the Post-Holiday Bargain Bin - Barron's Interview

Barron's interviews David Winters, CEO, Wintergreen Advisers. His strategy is to find quality stocks far from the beaten path. Winters says the current market downturn is "a gigantic after-Christmas sale" featuring indiscriminate selling at bargain-basement prices. Presently, he looks for companies with healthy, growing free cash flow that are run by shareholder-friendly management. Companies he likes:

• Consolidated-Tomoka Land (CTO) -- Winters, with one seat on the board and a push for three more, wants the company to hold on to and develop its land portfolio. He notes that buying real estate now on the cheap can be a hugely successful strategy for the patient.
• Wynn Resorts (WYNN) -- super attention to detail; management has a huge equity stake in the company. Investors fail to understand the value of its Macau development, and in general tends to undervalue complex companies like WYNN due to their obsession with the short-term.
• Berkshire Hathaway (BRK.A) -- its $40B in cash, which haunted investors not so long ago, now seems prescient. In a market full of liquidity issues, its pristine balance sheet and massive free cash flow provide a huge downside cushion.

Winters says he's worried about inflation, and likes stocks that can raise prices to overcome it -- specifically tobacco (he mentions British American Tobacco (BTI)) and gaming companies.

Comments

[mkreisel:]

BRK.A is hardly in the bargain bin, it's rather more close to its all-time high.

Valued on the P/B basis, BRK.A is near the higher end of its historical range.

I've been long BRK.A since August 2006.

2008 Feb 24 05:46 PM

[jimmy46:]

Wynn has two <2> casinos that makes it complex?

2008 Feb 24 07:09 PM

[dectra:]

I agree on one point with mkreisl, Brk.a is pricey. But if you look at the companies within the company, they are doing very well, even in this market.

Additionally, when you consider the amount of free cash flow the sub companies generate, there is a good bit of value in this stock.

(disclosure: I own Brk.a, long term position)

2008 Feb 25 09:11 AM

[mkreisel:]

BRKA of course is solid, but current price is not that attractive. If you want to buy, wait at least until the AR comes out this Friday.

2008 Feb 25 03:27 PM