There's a lot of bad information in the financial press. So much that the typical individual investor has a hard time processing it all, leading to self-doubt and bad decisions. So when I read this nonsense on one of our Complete Growth Investor Growth & Value Focus portfolio stocks from Bloomberg market commentator John Dorfman, my confidence is restored that most of the "market" hasn't got a clue.

About two weeks ago, Premier Exhibitions (PRXI) released its second quarter fiscal 2010 results. It’s amazing how quickly Chris Davino and his team are making progress.

Tom has written in the Forum and in past Coaches about the Value Investing Royalty, a cadre of value investors whose prowess and notoriety are ubiquitous on the web, in blogs and all over the media. Their performance history, their position-building methods and their usual willingness to share their opinions on stocks have informed the choices of many investors.

Last week I read Premier Exhibitions' (PRXI) reply to the Sellers Capital Solicitation. What a waste of 18 pages of paper! Geller's response is as limp as the spaghetti noodles I had for dinner.

Except it hadn't and they didn't, as we learned in 2000-2002.

Here are some headlines I read this morning:

Now, if you’re a long time reader of my blog (long term being not so long, April), one of my very first posts was about a SmartMoney article with Pabrai.   In the SM article, Pabari’s #1 idea was Pinnacle.  He argued that the company was worth several times its then price, $15/share.   By this point, I was already familiar with Pabrai’s thesis on Pinnacle, as he had written up an extraordinarily detailed thesis on Value Investors Club late last year. 

Instead of me giving you all the quotes, you might as well just go ahead and read the press release.  There are too many great quotes for me to choose one or two. Basically, Biglari is doing with Steak N Shake exactly what he told shareholders he planned to do.  Here’s how I’d sum up the release:

There are some other companies I’ve been looking at, generally good companies selling at cheap prices or undergoing change.  I still have much work to do on most of these, and don’t own any of them quite yet.  I’ll probably only buy one of ‘em, maybe two.

1. Administrative Outings:

• Visit Circle of Competence

1. Are you a value investor?

Reality check number 1: In normal times, Sears is generating a good $50 billion in sales.  $50B.  The current market value hovers around $10B, or one fifth of sales.  Add in net debt ($2.7B in LT debt and capital lease obligations plus a $1.1B pension shortfall) and subtract cash ($1.4B), enterprise value goes up to about $12.5B. Is Sears worth a quarter of its annual sales?  Well, that depends on profit margins, which had been improving until late last year and into this one.   Right now, margins stink.  EBITDA margin came screeching down to 4.4% last quarter, which is awful.  Eddie has said in the past that Sears should, or aspires to, obtain a 10% margin, comparable to Wal-Mart and JCPenney.

The company is still small, and thus the meeting was relatively cozy, with not more than 50 people in attendance by my guess.  Sardar was right there at the door greeting those of us who entered the ballroom where the meeting was to be held.  With a couple of Coke glasses and microphones at the front, and seats for Mr. Biglari and his partner Mr. Cooley respectively, the meeting had the charm of a young Berkshire Hathaway.

I’m still in the early stages of looking at the mechanics of this transaction, and the businesses involved.  While I can’t say I have am loaded with knowledge about the cable industry, I’ve been learning about it recently, due to the fact I now own Echostar Communications Corp (SATS), the satellite and set-top box business spun off from from DISH Network (DISH) on Jan. 1 of this year.  One basic mental filter I always utilize before moving forward is “Can understand this with a little work?”  In the case of Time Warner, I think I can.

The 8-k filed on Thursday by the company tells us that Western Sizzlin’ has authorized Biglari to buy back up to 500,000 shares.  Doesn’t sound like much, until you consider that the company only has a total of 2,700,000 shares outstanding.

And yes, ahem, despite our image, value investors do scream, too.

Unfortunately, investors do not agree how to calculate this key number that goes into all value investing analysis. Fortunately, learning the different factors of free cash flow is fun and builds confidence!

You have the trifecta—high growth, cheap valuation, and a margin of safety—available at today’s $13 price. Yet investors—speculators?—prefer the profitless and prospect-less JDS Uniphase (JDSU), Avanex (AVNX), and Bookham (BKHM), or the outrageously valued Ciena (CIEN) or Harmonic (HLIT) to this cash-rich, exploding, well-managed and cheap company whose management brought it through the telecom depression with a pristine balance sheet.

Take a look...

Amazon.com's trailing twelve-month free cash flow, measured to the end of 3/2007: